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Historical Anthropometrics

Timothy Cuff, Westminster College

Historical anthropometrics is the study of patterns in human body size and their correlates over time. While social researchers, public health specialists and physical anthropologists have long utilized anthropometric measures as indicators of well-being, only within the past three decades have historians begun to use such data extensively. Adult stature is a cumulative indicator of net nutritional status over the growth years, and thus reflects command over food and access to healthful surroundings. Since expenditures for these items comprised such a high percentage of family income for historical communities, mean stature can be used to examine changes in a population’s economic circumstances over time and to compare the well-being of different groups with similar genetic height potential. Anthropometric measures are available for portions of many national populations as far back as the early 1700s. While these data often serve as complements to standard economic indicators, in some cases they provide the only means of assessing historical economic well-being, as “conventional” measures such as per capita GDP, wage and price indices, and income inequality measures have been notoriously spotty and problematic to develop. Anthropometric-based research findings to date have contributed to the scholarly debates over mortality trends, the nature of slavery, and the outcomes of industrialization and economic development. Height has been the primary indicator utilized to date. Other indicators include height-standardized weight indices, birth weight, and age at menarche. Potentially even more important, historical anthropometrics broadens the understanding of “well-being” beyond the one dimensional “ruler” of income, providing another lens through which the quality of historical life can be viewed.

This article:

  • provides a brief background of the field including a history of human body measurement and analysis and a description of the biological foundations for historical anthropometrics,
  • describes the current state of the field (along with methodological issues) and future directions, and
  • provides a selective bibliography.

Anthropometrics: Historical and Bio-Medical Background

The Evolution of Body Measurement and Analysis in Context

The measurement and description of the human form in the West date back to the artists of classical civilizations, but the rationale for systematic, large-scale body measurement and record keeping emerged out of the needs of early modern military organizations. By the mid-eighteenth century height commonly provided a means of classifying men into and of identifying them within military units and the procedures for measuring individuals entering military service were well established. The military’s need to identify recruits has provided most historical measurements of young men.

Scientific curiosity in the eighteenth century also spurred development of the first textbooks on human growth, although they were more concerned with growth patterns throughout life than with stature differences across groups or over time. In the nineteenth century class differences in height were easily observable in England. The moral outrage generated by the “tiny children” (Charles Dickens’ “Oliver Twists”) along with the view that medicine had a preventive as well as a curative function, meant that anthropometry was directed primarily at the poor, especially children toiling in the factories of English and French industrial cities. Later, fear in Britain over the “degeneration” of its men and their potential as an effective fighting force provided motivation for large-scale anthropometric surveys, as did efforts evolving out of the child-welfare movement. The early-twentieth century saw the establishment of a series of longitudinal population surveys (which follow individuals as they age) in North America and in Europe. In some cases this work was directed toward the generation of growth standards, while other efforts evaluated social-class differences among children. Such studies can be seen as transitional steps between contemporary and historical anthropometrics. Since the 1950s, anthropometry has been utilized for a variety of purposes in both the developed and underdeveloped world. Population groups have been measured in order to refine growth standards, to monitor the nutritional status of individuals and populations during famines and political disturbances, and to evaluate the effectiveness of economic development programs.

Anthropometric studies today can be classified as one of three types. Auxologists perform basic research, collecting body measurements over the human life cycle to further detail standards of physical development for twenty-first century populations. The second focus, a continuation of nineteenth century work, documents the living standards of children often supporting regulatory legislation or government aid policies. The third direction is historical anthropometrics. Economists, historians, and anthropologists specializing in this field seek to assess, in physical terms, the well-being of previous societies and the factors which influenced it.

Human Growth and Development: The Biological Foundations of Historical Anthropometrics

While historical anthropometric research is a relatively recent development, an extensive body of medical literature relating nutrition and epidemiological conditions to physical growth provides a strong theoretical underpinning. Bio-medical literature, along with the World Health Organization, describes mean stature as one of the best measures of overall health conditions within a society.

Final attained height and height by age both result from a complex interaction of genetic endowment and environmental effects. At the level of the individual, genetics is a strong but not exclusive influence on the determination of final height and of growth patterns. Genetics is most important when net nutrition is optimal. However, when evaluating differences among groups of people in sub-optimal nutritional circumstances environmental influences predominate.

The same nutritional regime can result in different final stature for particular individuals, because of genetic variation in the ability to continue growing in the face of adverse nutritional circumstances, epidemiological environments, or work requirements. However, the genetic height potential of most Europeans, Africans, and North Americans of European or African ancestry is comparable; i.e., under equivalent environmental circumstances the groups have achieved nearly identical mean adult stature. For example, in many parts of rural Africa, mean adult heights today are similar to those of Africans of 150 years ago, while well-fed urban Africans attain final heights similar to current-day Europeans and North Americans of European descent. Differences in nutritional status do result in wide variation in adult height even within populations of the same genetic make-up. For example, individuals from higher socio-economic classes tend to be taller than their lower class counterparts whether in impoverished third-world countries or in the developed nations.

Height is the most commonly utilized, but not the only, anthropometric indicator of nutritional status. The growth profile is another. Environmental conditions, while affecting the timing of growth (the ages at which accelerations and decelerations in growth rates occur), do not affect the overall pattern (the sequence in which growth/maturation events occur). The body seems to be self-stabilizing, postponing growth until caloric levels will support it and maintaining genetically programmed body proportions more rigidly than size potential. While final adult height and length of the growth period are not absolutely linked, populations which stop growing earlier usually, although not universally, end up being taller. Age at menarche, birth weight, and weight-for-height are also useful. Age at menarche (i.e. the first occurrence of menstruation) is not a measure of physical size, but of sexual maturation. Menarche generally occurs earlier among well-nourished women. Average menarcheal age in the developed West is about 13 years, while in the middle of the nineteenth century it was between 15 and 16 years among European women. Areas which have not experienced nutritional improvement over the past century have not witnessed decreases in the age at menarche. Infant birth weight, an indicator of long-term maternal nutritional status, is influenced by the mother’s diet, work intensity, quality of health care, maternal size and the number of children she has delivered, as well as the mother’s health practices. The level of economic inequality and social class status are also correlated with birth weight variation, although these variables reflect some of the factors noted above. However, because the mother’s diet and health status are such strong influences on birth weight, it provides another useful means of monitoring women’s well-being. Height-for-weight indices, particularly the body mass index (BMI), have seen some use by anthropometric historians. Contemporary bio-medical research which links BMI levels and mortality risk hints at the promise which this measure might hold for historians. However, the limited availability of weight measurements before the mid-nineteenth century will limit the studies which can be produced.

Improvements in net nutritional status, both across wide segments of the population in developed countries and within urban areas of less-developed countries (LDCs), are generally accepted as the most salient influence on growth patterns and final stature. The widely experienced improvement in net nutrition which was apparent in most of the developed world across most of the twentieth century and more recently in the “modern” sector of some LDCs has lead to a secular trend, the unidirectional trend toward greater stature and faster maturation. Before the twentieth century, height cycling without a distinct direction was the dominant historical pattern. (Two other sources of stature increase have been hypothesized but have garnered little support among the medical community: the increased practice of infantile smallpox vaccination and heterosis (hybrid vigor), i.e. varietal cross-breeding within a species which produces offspring who are larger or stronger than either parent.)

The Definition and Determination of Nutritional Status

“Nutritional status” is a term critical to an understanding of anthropometrics. It encompasses more than simply diet, i.e. the intake of calories and nutrients, and is thus distinct from the more common term “nutrition.” While nutrition refers to the quantity and quality of food inputs to the human biological system, it makes no reference to the amounts needed for healthy functioning resulting from nutrient demand placed on the individual. Nutritional status, or synonymously “net nutrition,” refers to the summing up of nutrient input and demand on those nutrients. While work intensity is the most obvious demand, it is just one of many. Energy is required to resist infection. Pregnancy adds caloric and nutrient demands, as does breast-feeding. Calories expended in any of these fashions are available neither for basal metabolism, nor for growth. The difference between nutrition and nutritional status/net nutrition is important for anthropometrics, because it is the latter, not the former, for which auxological measurements are a proxy.

Human biologists and medical scientists generally agree that within genetically similar populations net nutrition is the primary determinant of adult physical stature. Height, as Bielicki notes, is “socially induced variation.” Figure 1 indicates the numerous channels of influence on the final adult stature of any individual. Anthropometric indicators reflect the relative ease or difficulty of acquiring sufficient nutrients to provide for growth in excess of the immediate needs of the body. Nutritional status and physical stature clearly are composite measures of well-being linked to economic processes. However, the link is mediated through a variety of social circumstances, some volitional, others not. Hence, anthropometric historians must evaluate each situation within its own economic, cultural, and historical context.

In earlier societies, and in some less developed countries today, access to nutrients was determined primarily by control of arable land. As markets for food developed and urban living became predominant, for increasing percentages of the population, access to nutrients depended upon the ability to purchase food, i.e. on real income. Additionally, food allocation within the family is not determined by markets but by intra-household bargaining as well as by tastes and custom. For example, in some cultures households distribute food resources so as to ensure nutritional adequacy for those family members engaged in income or resource-generating activity in order to maximize earning power. The handful of studies which include historical anthropometric data for women reveal that stature trends by gender do not always move in concert. Rather, in periods of declining nutritional status, women often exhibited a reduction in stature levels before such changes appeared among males. This is somewhat paradoxical because biologists generally argue that women’s growth trajectories are more resistant to a diminution in nutritional status than are those of men. Though too little historical research has been done on this issue to speak with certainty, the pattern might imply that, in periods of nutritional stress, women bore the initial brunt of deprivation.

Other cultural practices, including the high status accorded to the use of certain foods, such as white flour, polished rice, tea or coffee may promote greater consumption of nutritionally less valuable foods among those able to afford them. This would tend to reduce the resultant stature differences by income. Access to nutrients also depends upon other individual choices. A small landholder might decide to market much of his farm’s high-value, high-protein meat and dairy products, reducing his family’s consumption of these nutritious food products in order to maximize money income. However, while material welfare would increase, biological welfare, knowingly or unknowingly, would decline.

Disease-exposure variation occurs as a result of some factors under the individual’s control and other factors which are determined at the societal level. Pathogen prevalence and potency and the level of community sanitation are critical factors which are not directly affected by individual decision making. However, housing and occupation are often individually chosen and do help to determine the extent of disease exposure. Once transportation improvements allow housing segregation based on socio-economic status to occur within large urban areas, residence location can become an important influence. However, prior to such, for example in mid-nineteenth century United States, urban childhood mortality levels were more influenced by the number of children in a family than by parental occupation or socio-economic status. The close proximity of the homes of the wealthy and the poor seems to have created a common level of exposure to infectious agents and equally poor sanitary conditions for children of all economic classes.

Work intensity, another factor determining nutritional status, is a function of the age at which youth enter the labor force, educational attainment, the physical exertion needed in a chosen occupation, and the level of technology. There are obvious feedback effects from current nutritional status to future nutritional status. A low level of nutritional status today might hinder full-time labor-force participation, and result in low incomes, poor housing, and substandard food consumption in subsequent periods as well, thereby reinforcing the cycle of nutritional inadequacy.

Historical Anthropometrics

Early Developments in the Field

Le Roy Ladurie’s studies of nineteenth-century French soldiers published in the late 1960s and early 1970s are recognized as the first works in the spirit of modern historical anthropometrics. He documented that stature among French recruits varied with their socio-economic characteristics. In the U.S., the research was carried forward in the late 1970s, much based on nineteenth-century records of U.S. slaves transported from the upper to the lower South. Studies of Caribbean slaves followed.

In the 1980s numerous anthropometric works were generated in connection with a National Bureau of Economic Research (NBER) directed study of American and European mortality trends from 1650 to the present, coordinated by Robert W. Fogel. Motivated in great part by the desire to evaluate Thomas McKeown’s hypothesis that improvements in nutrition were the critical component in mortality declines in the seventeenth through the nineteenth centuries, the project has lead to the creation of numerous large anthropometric data bases. These have been the starting point for the analysis of trends in physical stature and net nutritional status on both sides of the Atlantic. While most historical anthropometric studies published in the U.S. during the early and mid-1980s were either outgrowths of the NBER project or were conducted by students of Robert Fogel, such as Richard Steckel and John Komlos, mortality trends were no longer the sole focus of historical anthropometrics. Anthropometric statistics were used to analyze the effect of industrialization on the populations experiencing it, as well as the characteristics of slavery in the United States. The data sources were primarily military records or documents relating to slaves. As the 1980s became the 1990s the geographic range of stature studies moved beyond Europe and North American to include Asia, Australia, and Africa. Other data sources were utilized. These included records from schools and utopian communities, certificates of freedom for manumitted slaves, voter registration cards, newspaper advertisements for runaway slaves and indentured servants, insurance applications, and a variety of prison inmate records. The number of anthropometric historians also expanded considerably.

Findings to Date

Major achievements to date in historical anthropometrics include 1) the determination of the main outlines of the trend in physical stature in Europe and North America between the eighteenth and twentieth centuries, and 2) the emergence of several well-supported, although still debated, hypotheses pertaining to the relationship between height and the economic and social developments which accompanied modern economic growth in these centuries.

Historical research on human height has indicated how much healthier the New World environment was compared to that of Europe. Europeans who immigrated to North America, on average, obtained a net nutritional status far better than that which was possible for them to attain in their place of birth. Eighteenth century North Americans attained mean heights not achieved by Europeans until the twentieth century. The combination of lower population density, lower levels of income inequality, and greater food resources bestowed a great benefit upon those growing up in North America. This advantage is evident not only in adult heights but also in the earlier timing of the adolescent growth spurt, as well as the earlier attainment of final height.

Table 1
Mean Heights of Adult Males (in inches)

Table 1
Mean Heights of Adult Males (in inches)–>

North America Europe
European Ancestry African Ancestry Hungary England Sweden
1775 – 1783 1861 – 1865 1943 – 1944 1811 – 1861 1943 – 1944 1813 – 1835 1816 – 1821 1843 – 1886
68.1 68.5 68.1 67.0 67.9 64.2 65.8 66.3

Sources: U.S. whites, 1775-1783: Kenneth L. Sokoloff and Georgia C. Villaflor, “The Early Achievement of Modern Stature in America,” Social Science History 6 (1982): 453-481. U.S. whites, 1861-65: Robert Margo and Richard Steckel, “Heights of Native-Born Whites during the Antebellum Period,” Journal of Economic History 43 (1983): 167-174. U.S. whites and blacks, 1943-44: Bernard D. Karpinos, “Height and Weight of Selective Service Registrants Processed for Military Service during World War II,” Human Biology 40 (1958): 292-321, Table 5. U.S. blacks, 1811-1861: Robert Margo and Richard Steckel, “The Height of American Slaves: New Evidence on Slave Nutrition and Health,” Social Science History 6 (1982): 516-538, Table 1. Hungary: John Komlos. Nutrition and Economic Development in the Eighteenth Century Habsburg Monarchy, Princeton: Princeton University Press, 1989, Table 2.1, 57. Britain: Roderick Floud, Kenneth Wachter, and Annabel Gregory, Height, Health, and History: Nutritional Status in the United Kingdom, 1750-1980, Cambridge: Cambridge University Press, 1990, Table 4.1, 148. Sweden: Lars G. Sandberg and Richard Steckel, “Overpopulation and Malnutrition Rediscovered: Hard Times in 19th-Century Sweden,” Explorations in Economic History 25 (1988): 1-19, Table 2, 7.

Note: Dates refer to dates of measurement.

Stature Cycles in Europe and America

The early finding that there was not a unidirectional upward trend in stature since the 1700s startled researchers, whose expectations were based on recent experience. Extrapolating backward, Floud, Wachter, and Gregory note that such surprise was misplaced, for if the twentieth century’s rate of height increase had been occurring for several centuries, medieval Europeans would have been dwarfs or midgets. Instead, in Europe cycles in height were evident. Though smaller in amplitude than in Europe, stature cycling was a feature of the American experience, as well. At the time of the American Revolution, the Civil War, and World War II, the mean height of adult, native-born white males was a fraction over 68 inches (Table 1), but there was some variation in between these periods with a small decline in the years before the Civil War and perhaps another one from 1860 into the 1880s. Just before the turn of the twentieth century, mean stature began its relatively uninterrupted increase which continues to the present day. These findings are based primarily on military records drawn from the early national army, Civil War forces, West Point Cadets, and the Ohio National Guard, although other data sets show similar trends. The free black population seems to have experienced a downturn in physical stature very similar to that of whites in the pre-Civil War period. However, an exception to the antebellum diminution in nutritional status has been found among slave men.

Per Capita Income and Height

In addition to the cycling in height, anthropometric historians have documented that the intuitively anticipated positive correlation between mean height and per capita income holds at the national level in the twentieth century. Steckel has shown that, in cross-national comparison, the correlation between height and per capita income is as high as .84 to .90. However, since per capita income is highly correlated with a series of other variables that also affect height, the exact pathway through which income affects height is not fully clear. Among the factors which help to explain the variation are better diet, medicine, improvements in sanitary infrastructure, longer schooling, more sedentary life, and better housing. Intense work regimes and psycho-social stress, both of which affect growth negatively, might also be mitigated by greater per capita income. However, prior to the twentieth century the relationship between height and income was not monotonic. U.S. troops during the American Revolution were nearly as tall as U.S. soldiers sent to Europe and Japan in the 1940s, despite the fact that per capita income in the earlier period was substantially below that in the latter. Similarly, while per capita income in the U.S. in the late 1770s was below that of the British, the American troops had a height advantage of several inches over their British counterparts in the War of Independence.

Height and Income Inequality

The level of income inequality also has a powerful influence on mean heights. Steckel’s analysis of data for the twentieth century indicates that a 0.1 decrease in the Gini coefficient (indicating greater income equality) is associated with a gain in mean stature of about 3.7 cm (1.5 inches). In societies with great inequality, increases in per capita income have little effect on average stature if the gains accrue primarily to the wealthier segments of the society. Conversely, even without changes in average national per capita income, a reduction in inequality can have similar positive impact upon the stature and health of those at the lower rungs of the income ladder.

The high level of social inequality at the onset of modern economic growth in England is exemplified by the substantial disparity between the height of students of the Sandhurst Royal Military Academy, an elite institution, and the Marine Society, a home for destitute boys in London. The difference in mean height at age fourteen exceeded three inches in favor of the gentry. In some years the gap was even greater. Komlos has documented similar findings elsewhere: regardless of location, boys from “prestigious military schools in England, France, and Germany were much taller than the population at large.” A similar pattern existed in the nineteenth-century U.S. However, the social gap in the U.S. was miniscule compared to that prevailing in the Old World. Stature also varied by occupational groups. In eighteenth and nineteenth century Europe and North America, white collar and professional workers tended to be significantly taller than laborers and unskilled workers. However, farmers, being close to the source of nutrients and with fewer interactions with urban disease pools, tended to be the tallest, though their advantage disappeared by the twentieth century.

Regional and Rural-Urban Differences

Floud, Wachter, and Gregory have shown that, in early nineteenth century Britain, regional variation in stature dwarfed occupational differences. In 1815, Scotsmen, rural and urban, as well as the Irish, were about one-half an inch taller than the non-London urban English of the day. The rural English were slightly shorter, on average, than Englishmen born in small and medium sized towns. Londoners, however, had a mean height almost one-third of an inch less than other urban dwellers in England and more than three-quarters of an inch below the Irish or the Scots. A similar pattern held among convicts transported to New South Wales, Australia, except that the stature of the rural English was well above the average for all other English transported convicts. Floud, Wachter, and Gregory show a trend of convergence in height among these groups after 1800. The tendency for low population density rural areas in the nineteenth century to be home to the tallest individuals was apparent from the Habsburg Monarchy to Scotland, and in the remote northern regions of late nineteenth-century Sweden and Japan as well. In colonial America the rural-urban gradient did not exist. As cities grew, the rural born began to display a stature advantage over their urban brethren. This divergence persisted into the nineteenth century, and disappeared in the early twentieth century, when the urban-born gained a height advantage.

The Early-Industrial-Growth and Antebellum Puzzles

These patterns of stature variation have been put into a framework in both the European and the American contexts. Respectively they are known as the “early-industrial-growth puzzle” and the “Antebellum puzzle.” The commonality which has been identified is that in the early stages of industrialization and/or market integration, even with rising per capita incomes, the biological well-being of the populations undergoing such change does not, necessarily, improve immediately. Rather, for at least some portions of the population, biological well-being declined during this period of economic growth. Explanations for these paradoxes (or puzzles) are still being investigated and include: rising income inequality, the greater spread of disease through more thoroughly developed transportation and marketing systems and urban growth, the rising real price of food as population growth outstripped the agricultural system’s ability to provide, and the choice of farmers to market rather than consume high value/high protein crops.

Slave Heights

Research on slave heights has provided important insight into the living standards of these bound laborers. Large differences in stature have been documented between slaves on the North American mainland and those in the Caribbean. Adult mainland slaves, both women and men, were approximately two inches taller than those in the West Indies throughout the eighteenth and nineteenth centuries. Steckel argues that the growth pattern and infant mortality rates of U.S. slave children indicate that they were moderately to severely malnourished, with mean heights for four to nine year olds below the second percentile of modern growth standards and with mortality rates twice those estimated for the entire United States population. Although below the fifth percentile throughout childhood, as adults these slaves were relatively tall by nineteenth-century standards, reaching about the twenty-fifth percentile of today’s height distribution, taller than most European populations of the time.

Height’s Correlation with Other Biological Indicators

The evaluation of McKeown’s hypothesis that much of the modern decline in mortality rates could be traced to improvements in nutrition (food intake) was one of the early rationales for the modern study of historical stature. Subsequent work has presented evidence for the parallel cycling of height and life expectancy in the United States during the nineteenth century. The relationship between the body-mass index, morbidity, and mortality risk within historical populations has also been documented. Along a similar line, Sandberg and Steckel’s data on Sweden have pointed out the parallel nature of stature trends and childhood mortality rates in the mid-nineteenth century.

Economic and social history are not the only two fields which have felt historical anthropometrics’ impact. North American slave height-by-age profiles developed by Steckel have been used by auxologists to exemplify the range of possible growth patterns among humans. Based on findings within the biological sciences, historical studies of stature have come full circle and are providing those same sciences with new data on human physical potential.

Methodological Issues

Accuracy problems in military-based data sets arise predominantly from carelessness of the measurer or from intentional misreporting of data rather than from lack of orthodox practice. Inadequate concern for accuracy can most often be noticed in heaping (height observations rounded to whole feet, six inch increments, or even numbered inches) and lack of fractional measurements. These “rounding” errors tend to be self-canceling. Of greater concern is intentional misreporting of either height or age, because minimum stature and age restrictions were often applied to military recruits. Young men, eager to discover the “romance” of military life or receive the bounty which sometimes accompanied enlistment, were not impervious to slight fabrication of their age. Recruiting officers, hoping to meet their assigned quotas quickly, might have been tempted to round measurements up to the minimum height requirement. Hence, it is not uncommon to find height and age heaping at either the age or stature minima.

For anthropometric historians, the issue of the representativeness of the population under study is similar to that for any social historian, but several specific caveats are appropriate when considering military samples. In time of peace military recruits tend to be less representative of the general population than are wartime armies. The military, with fewer demands for personnel, can be more selective, often instituting more stringent height minima, and occasionally maxima, for recruits. Such policies, as well as the self-interested behaviors noted above, require those who would use military data sets to evaluate and potentially adjust the data to account for the observations missing due to either left or right tail truncation. A series of techniques to account for such difficulties in the data have been developed, although there is still debate over the most appropriate technique. Other data sets also exhibit selectivity biases, although of different natures. Prison registers clearly do not provide a random sample of the population. The filter, however, is not based on size or desire for “exciting” work – rather on the propensity for criminal activity and on the enforcement mechanism of the judicial system. The representativeness of anthropometric samples can also be affected by previous selection by the Grim Reaper. Within Afro-Caribbean slave populations in Trinidad, death rates were significantly higher for shorter individuals (at all ages) than for the taller ones. The result is that a select group of more robust and taller individuals remained alive for eventual measurement.

One difficulty faced by anthropometric historians is the association of this research, more imagined than real, with previous misuses of body measurement. Nineteenth century American phrenologists used skull shape and size as a means of determining intelligence and as a way of justifying the enslavement of African-Americans. The Bertillon approach to evaluating prison inmates included the measurement and classification of lips, ears, feet, nose, and limbs in an effort to discern a genetic or racial basis for criminality. The Nazis attempted to breed the perfect race by eliminating what they perceived to be physically “inferior” peoples. Each, appropriately, has made many squeamish in regard to the use of body measurements as an index of social development. Further, while the biological research which supports historical anthropometrics is scientifically well founded and fully justifies the approach, care must be exercised to ensure that the impression is not given that researchers either are searching for, or promoting, an “aristocracy of the tall.” Being tall is not necessarily better in all circumstances, although recent work does indicate a series of social and economic advantages do accrue to the tall. However, for populations enduring an on-going sub-optimal net nutritional regime, an increase in mean height does signify improvement in the net nutritional level, and thus the general level of physical well-being. Untangling the factors responsible for change in this social indicator is complicated and height is not a complete proxy for the quality of life. However, it does provide a valuable means of assessing biological well-being in the past and the influence of social and economic developments on health.

Future Directions

Historical anthropometrics is maturing. Over the past several years a series of state-of-the-field articles and anthologies of critical works have been written or compiled. Each summarizes past accomplishments, consolidates isolated findings into more generalized conclusions, and/or points out the next steps for researchers. In 2004, the editors of Social Science History devoted an entire volume to anthropometric history, drawing upon both current work and remembrances of many of the field’s early and prominent researchers, including an integrative essay by Komlos and Baten. Anthropometric history now has its own journal, as John Komlos, who has literally established a center for historical anthropometrics in Munich, created Economics and Biology, “devoted to the exploration of the effect of socio-economic processes on human beings as biological organisms.” Early issues highlight the wide geographic, temporal, and conceptual range of historical anthropometric studies. Another project which shows the great range of current effort is Richard Steckel’s work with anthropologists to characterize very long term patterns in the movement of mean human height. Already this collaboration has produced, The Backbone of History: Health and Nutrition in the Western Hemisphere, a compilation of essays documenting the biological well-being of New World populations beginning in 5000 B.C. using anthropological evidence. Its findings, consistent with those of some other recent anthropological studies, indicate a decline in health status for members of Western Hemisphere cultures in the pre-Columbian period as these societies began the transition from economies based on hunting and gathering to ones relying more heavily on settled agriculture. Steckel has been working to expand this approach to Europe via a collaborative and interdisciplinary project funded in part by the U.S. National Science Foundation, titled, “A History of Health in Europe from the Late Paleolithic Era to the Present.”

Yet even with these impressive steps, continued work, similar to early efforts in the field, is still needed. Expansion of the number and type of samples are important steps in the confirmation and consolidation of early results. One of the field’s on-going frustrations is that, except for slave records, few data sets contain physical measurements for large numbers of females. To date, female slaves and ex-slaves, some late nineteenth century U.S. college women, along with transported female convicts are the primary sources of female historical stature. Generalizations of research findings to entire populations are hindered by the small amount of data on females and the knowledge, from that data which are extant, that stature trends for the two sexes do not mimic each other. Similarly, upper class samples of either sex are not common. Future efforts should be directed at locating samples which contain data on these two understudied groups.

As Riley noted, the problem which anthropometric historians seek to resolve is not the identification of likely influences on stature. The biological sciences have provided that theoretical framework. The task at hand is to determine the relative weight of the various influences or, in Fogel’s terms, to perform “an accounting exercise of particularly complicated nature, which involves measuring not only the direct effect of particular factors but also their indirect effects and their interactions with other factors.”

More localized studies, with sample sizes adequate statistical analysis, are needed. These will allow the determination of the social, economic, and demographic factors most closely associated with human height variation. Other key areas of future investigation include the functional consequences of differences in biological well-being proxied by height, including differences in labor productivity and life expectancy. Even with the strides that have been made, in some corners, skepticism remains about the approach. To combat this, researchers must be careful to stress repeatedly what anthropometric indicators proxy, what their limits are, and how knowledge of anthropometric trends can appropriately influence our understanding of economic and social history as well as inform social policy. The field promises many future insights into the nature of and influences on historical human well-being and thus clues about how human well-being, the focus of economics generally, can be more fully and more widely advanced.

Selected Bibliography

Survey/Overview Publications

Engerman, Stanley. “The Standard of Living Debate in International Perspective: Measures and Indicators.” In Health and Welfare during Industrialization, edited by Richard H. Steckel and Roderick Floud, 17-46. Chicago: University of Chicago Press, 1997.

Floud, Roderick, and Bernard Harris. “Health, Height, and Welfare: Britain 1700-1980.” In Health and Welfare during Industrialization, edited by Richard H. Steckel and Roderick Floud, 91-126. Chicago: University of Chicago Press, 1997.

Floud, Roderick, Kenneth Wachter, and Annabelle Gregory. “The Heights of Europeans since 1750: A New Source for European Economic History.” In Stature, Living Standards, and Economic Development: Essays in Anthropometric History, edited by John Komlos, 10-24. Chicago: University of Chicago Press, 1994.

Floud, Roderick, Kenneth Wachter, and Annabelle Gregory. Height, Health, and History: Nutritional Status in the United Kingdom, 1750-1980. Cambridge: Cambridge University Press, 1990.

Fogel, Robert W. “Nutrition and the Decline in Mortality since 1700: Some Preliminary Findings.” In Long-Term Factors in American Economic Growth, edited by Stanley Engerman and Robert Gallman, 439-527. Chicago: University of Chicago Press, 1987.

Haines, Michael R. “Growing Incomes, Shrinking People – Can Economic Development Be Hazardous to Your Health? Historical Evidence for the United States, England, and the Netherlands in the Nineteenth Century.” Social Science History 28 (2004): 249-70.

Haines, Michael R., Lee A. Craig, and Thomas Weiss. “The Short and the Dead: Nutrition, Mortality, and the ‘Antebellum Puzzle’ in the United States.” Journal of Economic History 63 (June 2003): 382-413.

Harris, Bernard. “Health, Height, History: An Overview of Recent Developments in Anthropometric History.” Social History of Medicine 7 (1994): 297-320.

Harris, Bernard. “The Height of Schoolchildren in Britain, 1900-1950.” In Stature, Living Standards and Economic Development: Essays in Anthropometric History, edited by John Komlos, 25-38. Chicago: University of Chicago Press, 1998.

Komlos, John, and Jörg Baten. The Biological Standard of Living in Comparative Perspectives: Proceedings of a Conference Held in Munich, January 18-23, 1997. Stuttgart: Franz Steiner Verlag, 1999.

Komlos, John, and Jörg Baten. “Looking Backward and Looking Forward: Anthropometric Research and the Development of Social Science History.” Social Science History 28 (2004): 191-210.

Komlos, John, and Timothy Cuff. Classics of Anthropometric History: A Selected Anthology, St. Katharinen, Germany: Scripta Mercaturae, 1998.

Komlos, John. “Anthropometric History: What Is It?” Magazine of History (Spring 1992): 3-5.

Komlos, John. Stature, Living Standards, and Economic Development: Essays in Anthropometric History. Chicago: University of Chicago Press, 1994.

Komlos, John. The Biological Standard of Living in Europe and America 1700-1900: Studies in Anthropometric History. Aldershot: Variorum Press, 1995.

Komlos, John. The Biological Standard of Living on Three Continents: Further Essays in Anthropometric History. Boulder: Westview Press, 1995.

Steckel, Richard H., and J.C. Rose. The Backbone of History: Health and Nutrition in the Western Hemisphere. New York: Cambridge University Press, 2002.

Steckel, Richard H., and Roderick Floud. Health and Welfare during Industrialization. Chicago: University of Chicago Press, 1997.

Steckel, Richard. “Height, Living Standards, and History.” Historical Methods 24 (1991): 183-87.

Steckel, Richard. “Stature and Living Standards in the United States.” In American Economic Growth and Standards of Living before the Civil War, edited by Robert E. Gallman and John J. Wallis, 265-310. Chicago: University of Chicago Press, 1992.

Steckel, Richard. “Stature and the Standard of Living.” Journal of Economic Literature 33 (1995): 1903-40.

Steckel, Richard. “A History of the Standard of Living in the United States.” In EH.Net Encyclopedia, edited by Robert Whaples, http://www.eh.net/encyclopedia/contents/steckel.standard.living.us.php

Seminal Articles in Historical Anthropometrics

Aron, Jean-Paul, Paul Dumont, and Emmanuel Le Roy Ladurie. Anthropologie du Conscrit Francais. Paris: Mouton, 1972.

Eltis, David. “Nutritional Trends in Africa and the Americas: Heights of Africans, 1819-1839.” Journal of Interdisciplinary History 12 (1982): 453-75.

Engerman, Stanley. “The Height of U.S. Slaves.” Local Population Studies 16 (1976): 45-50.

Floud, Roderick and Kenneth Wachter. “Poverty and Physical Stature, Evidence on the Standard of Living of London Boys 1770-1870.” Social Science History 6 (1982): 422-52.

Fogel, Robert W. “Physical Growth as a Measure of the Economic Well-being of Populations: The Eighteenth and Nineteenth Centuries.” In Human Growth: A Comprehensive Treatise, second edition, volume 3, edited by F. Falkner and J.M. Tanner, 263-281. New York: Plenum, 1986.

Fogel, Robert W., Stanley Engerman, Roderick Floud, Gerald Friedman, Robert Margo, Kenneth Sokoloff, Richard Steckel, James Trussell, Georgia Villaflor and Kenneth Wachter. “Secular Changes in American and British Stature and Nutrition.” Journal of Interdisciplinary History 14 (1983): 445-81.

Fogel, Robert W., Stanley L. Engerman, and James Trussell. “Exploring the Uses of Data on Height: The Analysis of Long-Term Trends in Nutrition, Labor Welfare, and Labor Productivity.” Social Science History 6 (1982): 401-21.

Friedman, Gerald C. “The Heights of Slaves in Trinidad.” Social Science History 6 (1982): 482-515.

Higman, Barry W. “Growth in Afro-Caribbean Slave Populations.” American Journal of Physical Anthropology 50 (1979): 373-85.

Komlos, John. “The Height and Weight of West Point Cadets: Dietary Change in Antebellum America.” Journal of Economic History 47 (1987): 897-927.

Le Roy Ladurie, Emmanuel, N. Bernageau, and Y. Pasquet. “Le Conscrit et l’ordinateur: Perspectives de recherches sur les Archives Militaries du XIXieme siecle Francais.” Studi Storici 10 (1969): 260-308.

Le Roy Ladurie, Emmanuel. “The Conscripts of 1868: A Study of the Correlation between Geographical Mobility, Delinquency and Physical Stature and Other Aspects of the Situation of the Young Frenchmen Called to Do Military Service That Year.” In The Territory of the Historian. Translated by Ben and Sian Reynolds. Chicago: University of Chicago Press, 1979.

Margo, Robert and Richard Steckel. “Heights of Native Born Whites during the Antebellum Period.” Journal of Economic History 43 (1983): 167-74.

Margo, Robert and Richard Steckel. “The Height of American Slaves: New Evidence on Slave Nutrition and Health.” Social Science History 6 (1982): 516-38.

Steckel, Richard. “Height and per Capita Income.” Historical Methods 16 (1983): 1-7.

Steckel, Richard. “Slave Height Profiles from Coastwise Manifests.” Explorations in Economic History 16 (1979): 363-80.

Articles Addressing Methodological Issues

Heintel, Markus, Lars Sandberg and Richard Steckel. “Swedish Historical Heights Revisited: New Estimation Techniques and Results.” In The Biological Standard of Living in Comparative Perspective, edited by John Komlos and Jörg Baten, 449-58. Stuttgart: Franz Steiner, 1998.

Komlos, John, and Joo Han Kim. “Estimating Trends in Historical Heights.” Historical Methods 23 (1900): 116-20.

Riley, James C. “Height, Nutrition, and Mortality Risk Reconsidered.” Journal of Interdisciplinary History 24 (1994): 465-92.

Steckel, Richard. “Percentiles of Modern Height: Standards for Use in Historical Research.’ Historical Methods 29 (1996): 157-66.

Wachter, Kenneth, and James Trussell. “Estimating Historical Heights.” Journal of the American Statistical Association 77 (1982): 279-303.

Wachter, Kenneth. “Graphical Estimation of Military Heights.” Historical Methods 14 (1981): 31-42.

Publications Providing Bio-Medical Background for Historical Anthropometrics

Bielecki, T. “Physical Growth as a Measure of the Economic Well-being of Populations: The Twentieth Century.” In Human Growth, second edition, volume 3, edited by F. Falkner and J.M. Tanner, 283-305. New York: Plenum, 1986.

Bogin, Barry. Patterns of Human Growth. Cambridge: Cambridge University Press, 1988.

Eveleth, Phyllis B. “Population Differences in Growth: Environmental and Genetic Factors.” In Human Growth: A Comprehensive Treatise, second edition, volume 3, edited by F. Falkner and J.M. Tanner, 221-39. New York: Plenum, 1986.

Eveleth, Phyllis B. and James M. Tanner. Worldwide Variation in Human Growth. Cambridge: Cambridge University Press, 1976.

Tanner, James M. “Growth as a Target-Seeking Function: Catch-up and Catch-down Growth in Man.” In Human Growth: A Comprehensive Treatise, second edition, volume 1, edited by F. Falkner and J.M. Tanner, 167-80. New York: Plenum, 1986.

Tanner, James M. “The Potential of Auxological Data for Monitoring Economic and Social Well-Being.” Social Science History 6 (1982): 571-81.

Tanner, James M. A History of the Study of Human Growth. Cambridge: Cambridge University Press, 1981.

World Health Organization. “Use and Interpretation of Anthropometric Indicators of Nutritional Status.” Bulletin of the World Health Organization 64 (1986): 929-41.

Predecessors to Historical Anthropometrics

Bowles, G. T. New Types of Old Americans at Harvard and at Eastern Women’s Colleges. Cambridge, MA: Harvard University Press, 1952.

Damon, Albert. “Secular Trend in Height and Weight within Old American Families at Harvard, 1870-1965.” American Journal of Physical Anthropology 29 (1968): 45-50.

Damon, Albert. “Stature Increase among Italian-Americans: Environmental, Genetic, or Both?” American Journal of Physical Anthropology 23 (1965) 401-08.

Gould, Benjamin A. Investigations in the Military and Anthropological Statistics of American Soldiers. New York: Hurd and Houghton [for the U.S. Sanitary Commission], 1869.

Karpinos, Bernard D. “Height and Weight of Selective Service Registrants Processed for Military Service during World War II.” Human Biology 40 (1958): 292-321.

Publications Focused on Nonstature-Based Anthropometric Measures

Brudevoll, J.E., K. Liestol, and L. Walloe. “Menarcheal Age in Oslo during the Last 140 Years.” Annals of Human Biology 6 (1979): 407-16.

Cuff, Timothy. “The Body Mass Index Values of Nineteenth Century West Point Cadets: A Theoretical Application of Waaler’s Curves to a Historical Population.” Historical Methods 26 (1993): 171-83.

Komlos, John. “The Age at Menarche in Vienna.” Historical Methods 22 (1989): 158-63.

James M. Tanner. “Trend towards Earlier Menarche in London, Oslo, Copenhagen, the Netherlands, and Hungary.” Nature 243 (1973): 95-96.

Trussell, James, and Richard Steckel. “The Age of Slaves at Menarche and Their First Birth.” Journal of Interdisciplinary History 8 (1978): 477-505.

Waaler, Hans Th. “Height, Weight, and Mortality: The Norwegian Experience.” Acta Medica Scandinavica, supplement 679, 1984.

Ward, W. Peter, and Patricia C. Ward. “Infant Birth Weight and Nutrition in Industrializing Montreal.” American Historical Review 89 (1984): 324-45.

Ward, W. Peter. Birth Weight and Economic Growth: Women’s Living Standards in the Industrializing West. Chicago: University of Chicago Press, 1993.

Articles with a Non-western Geographic Focus

Cameron, Noel. “Physical Growth in a Transitional Economy: The Aftermath of South African Apartheid.” Economic and Human Biology 1 (2003): 29-42.

Eltis, David. ‘Welfare Trends among the Yoruba in the Early Nineteenth Century: The Anthropometric Evidence.” Journal of Economic History 50 (1990): 521-40.

Greulich, W.W. “Some Secular Changes in the Growth of American-born and Native Japanese Children.” American Journal of Physical Anthropology 45 (1976): 553-68.

Morgan, Stephen. “Biological Indicators of Change in the Standard of Living in China during the Twentieth Century.” In The Biological Standard of Living in Comparative Perspective, edited by John Komlos and Jörg Baten, 7-34. Struttart: Franz Steiner, 1998.

Nicholas, Stephen, Robert Gregory, and Sue Kimberley. “The Welfare of Indigenous and White Australians, 1890-1955.” In The Biological Standard of Living in Comparative Perspective, edited by John Komlos and Jörg Baten, 35-54. Stuttgart: Franz Steiner: 1998.

Salvatore, Ricardo D. “Stature, Nutrition, and Regional Convergence: The Argentine Northwest in the First Half of the Twentieth Century.” Social Science History 28 (2004): 297-324.

Shay, Ted. “The Level of Living in Japan, 1885-1938: New Evidence.’ In The Biological Standard of Living on Three Continents: Further Explorations in Anthropometric History, edited by John Komlos, 173-201. Boulder: Westview Press, 1995.

Articles with a North American Focus

Craig, Lee, and Thomas Weiss. “Nutritional Status and Agriculture Surpluses in antebellum United States.” In The Biological Standard of Living in Comparative Perspective, edited by John Komlos and Jörg Baten, 190-207. Stuttgart: Franz Steiner, 1998.

Komlos, John, and Peter Coclanis, “On the ‘Puzzling’ Antebellum Cycle of the Biological Standard of Living: The Case of Georgia,” Explorations in Economic History 34 (1997): 433-59.

Komlos, John. “Shrinking in a Growing Economy? The Mystery of Physical Stature during the Industrial Revolution,” Journal of Economic History 58 (1998): 779-802.

Komlos, John. “Toward an Anthropometric History of African-Americans: The Case of the Free Blacks in Antebellum Maryland.” In Strategic Factors in Nineteenth Century American Economic History: A Volume to Honor Robert W. Fogel, edited by Claudia Goldin and Hugh Rockoff, 267-329. Chicago: University of Chicago Press, 1992.

Murray, John. “Standards of the Present for People of the Past: Height, Weight, and Mortality among Men of Amherst College, 1834-1949.” Journal of Economic History 57 (1997): 585-606.

Murray, John. “Stature among Members of a Nineteenth Century American Shaker Commune.” Annals of Human Biology 20 (1993): 121-29.

Steckel, Richard. “A Peculiar Population: The Nutrition, Health, and Mortality of American Slaves from Childhood to Maturity.” Journal of Economic History 46 (1986): 721-41.

Steckel, Richard. “Health and Nutrition in the American Midwest: Evidence from the Height of Ohio National Guardsmen, 1850-1910.” In Stature, Living Standards, and Economic Development: Essays in Anthropometric History, edited by John Komlos, 153-70. Chicago: University of Chicago Press, 1994.

Steckel, Richard. “The Health and Mortality of Women and Children.” Journal of Economic History 48 (1988): 333-45.

Steegmann, A. Theodore Jr. “18th Century British Military Stature: Growth Cessation, Selective Recruiting, Secular Trends, Nutrition at Birth, Cold and Occupation.” Human Biology 57 (1985): 77-95.

Articles with a European Focus

Baten, Jörg. “Economic Development and the Distribution of Nutritional Resources in Bavaria, 1797-1839.” Journal of Income Distribution 9 (2000): 89-106.

Baten, Jörg. “Climate, Grain production, and Nutritional Status in Southern Germany during the XVIIIth Century.” Journal of European Economic History 30 (2001): 9-47.

Baten, Jörg and John Murray “Heights of Men and Women in the Nineteenth-century Bavaria: Economic, Nutritional, and Disease Influences.” Explorations in Economic History 37 (2000): 351-69.

Komlos, John. “Stature and Nutrition in the Habsburg Monarchy: The Standard of Living and Economic Development in the Eighteenth Century.” American Historical Review 90 (1985): 1149-61.

Komlos, John. “The Nutritional Status of French Students.” Journal of Interdisciplinary History 24 (1994): 493-508.

Komlos, John. “The Secular Trend in the Biological Standard of Living in the United Kingdom, 1730-1860.” Economic History Review 46 (1993): 115-44.

Nicholas, Stephen and Deborah Oxley. “The Living Standards of Women during the Industrial Revolution, 1795-1820.” Economic History Review 46 (1993): 723-49.

Nicholas, Stephen and Richard Steckel. “Heights and Living Standards of English Workers during the Early Years of Industrialization, 1770-1815.” Journal of Economic History 51 (1991): 937-57.

Oxley, Deborah. “Living Standards of Women in Prefamine Ireland.” Social Science History 28 (2004): 271-95.

Riggs, Paul. “The Standard of Living in Scotland, 1800-1850.” In Stature, Living Standards, and Economic Development: Essays in Anthropometric History, edited by John Komlos, 60-75. Chicago: University of Chicago Press: 1994.

Sandberg, Lars G. “Soldier, Soldier, What Made You Grow So Tall? A Study of Height, Health and Nutrition in Sweden, 1720-1881.” Economy and History 23 (1980): 91-105.

Steckel, Richard H. “New Light on the ‘Dark Ages’: The Remarkably Tall Stature of Northern European Men during the Medieval Era.” Social Science History 28 (2004): 211-30.

Citation: Cuff, Timothy. “Historical Anthropometrics”. EH.Net Encyclopedia, edited by Robert Whaples. August 29, 2004. URL http://eh.net/encyclopedia/historical-anthropometrics/

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Money in the Medieval English Economy: 973-1489

Author(s):Bolton, Jim
Reviewer(s):Munro, John

Published by EH.Net (June 2013)

Jim Bolton, Money in the Medieval English Economy: 973-1489.? Manchester: Manchester University Press, 2012.? xv + 317 pp.? $35 (paperback), ISBN: 978-0-7190-5040-4.

Reviewed for EH.Net by John Munro, Department of Economics, University of Toronto.

Embracing a most impressive range of research, cogently organized, penetrating in its analysis of all aspects of the medieval English economy related to money, and elegant in its prose, Bolton?s Money in the Medieval English Economy: 973-1489 is one of the most important books published in English medieval economic history during the past two decades.? Indeed, I do not know of any other comparable and equally comprehensive study of English medieval monetary history. The book is cast into two unequal parts.? Part I (pp. 3-86) is theoretical, beginning with the Fisher Identity and the relationships between money, population, and prices in the medieval economy, followed by uniformly excellent chapters on the roles of money in a developing market economy: in terms of? bullion supplies, coinage, and credit instruments.? The longer Part II (pp.? 87-309), analyses the changes in coinage and other forms of money, and then in more detail the changing roles of money in the actual economy, sector by sector, over three distinct eras: 973-1158, 1158-1351, and 1351-1489.
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This section thus begins with the monetary reforms of Edgar of Mercia, first to be crowned and remain king of England, in 973; and it ends with Henry VII?s issue of the first gold sovereign coin, representing the value of one pound sterling, in October 1489 (the shilling came later).? A far more logical end-point would have been the onset of Henry VIII?s Great Debasement in 1542-44, as in Martin Allen?s recent, magisterial Mints and Money in Medieval England (2012), to which Bolton acknowledges his great indebtedness. Manchester University Press?s severe space limitations evidently prevented Bolton from extending his study beyond 1489, and also from including his 25-page bibliography, now available only online (URL on p.? 310).
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Beyond the general objectives just outlined, Bolton?s book has two other major goals.? The first is achieved with great success: to prove, in chapters 6 and 7, that England did not acquire a fully-developed money economy until the era from 1158 to 1351, i.e., up to the onset of the Black Death.? In his fully justifiable view, a money economy essentially meant a well-functioning market economy, one that required not only a considerable expansion in the circulating coinage but also rapid population growth and the concomitant development of towns and villages with urban and regional fairs, the establishment of effective forms of royal taxation, the development of the requisite commercial, financial and legal institutions, especially those needed for various forms of credit; and for the latter, the spread of both literacy and numeracy.? He demonstrates that, while population growth from 1086 (Domesday Book) to 1300 at least doubled and may have tripled (from 2.0/2.5 million to 5.0/6.0 million), the money supply expanded by 27 to 40 fold: from ?25,000/?37,500 to more than ?1.0 million ? most of that from the 1220s, though attributing the major increases in coinage to the Central European silver mining booms of ca. 1160 to ca. 1230.? He cites Mayhew?s estimates (2004) that per capita GDP rose from ?0.18 in 1086 to ?0.78 in 1300 (and to ?1.52 in 1470: Table 9.2, p. 295). Depending on sources,? methodology, and population estimates, he contends that per capita supplies of silver coin rose from 3.2d/6.0d in 1042-1066 to 65.5d/101.3d in 1310 (Table 2.2, pp. 25-27).? Thereafter, the introduction of gold coinages (from 1343-51) created significant problems for both our estimates of money supplies and the well-being of the English domestic economy, especially since the English government consistently and seriously overvalued gold to the severe detriment of silver coinage supplies (in effect, England exported silver to acquire gold), given that silver coin was the chief mechanism for transacting domestic trade, wages, and other such payments.
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That problem, however, leads us to his second goal, for which he is much less successful: to refute the current ?monetarist? views that later fourteenth- and fifteenth-century England experienced severe monetary scarcities (whether seen in terms of stocks or flows), most especially in silver coin supplies.? A disclaimer is in order: I am evidently one of those so-called monetarists under attack.? The tenor of the book becomes most evident in his statement (p. 75) that: ?It [the money supply] was not the sole determining factor [of price levels] as monetarist historians argue.?? I do not know of anyone who now does so.? That negative viewpoint may be deduced from his lengthy discussion, in his opening chapter, of the well-known and much abused Fisher Identity: M.V = P.T.? Thus, if one accepts the view that changes in V (velocity) and T (volume of transactions) cancel each other out, one might deduce that the price level P ? usually measured by the Consumer Price Index (CPI) ? is directly and proportionately a function of changes in M.?? But, even if some historians still use this antiquated formula, few if any economists do so, preferring? the modernized version in the form M.V = P.y (the occasionally-used equation M.V = GNP is unacceptable as an analytical tool). In this version, y, representing real net national income (or output), thus replaces the completely unmeasurable T; and V thus becomes the income velocity of high-powered money (however defined). Most economists now prefer even more to use the Cambridge ?cash balances? approach, with a demand-for-money equation: M = k.P.y, in which M, P, and y remain the same, while k represents that proportion of national income that the public collectively chooses to hold in non-earning real cash balances, according to determinants of liquidity preference, so that k is often sensitive to changes in interest rates.? Mathematically k is the reciprocal of V.

As may be deduced from either (revised) formula, an expansion in M may have been offset by some decline in V (with a lesser need to economize on coin use) and thus by some increase in k, and also by an increase in y:? especially if an increased M led to a decline in interest rates (with no changes in liquidity preference) and to a greater stimulus for investment and trade, so that P would have risen less than proportionately, if at all.? But the converse was not necessarily true, for the various forces contracting monetary stocks may also have constricted monetary flows: i.e., also reducing V and thereby increasing k.? These revised formulae clearly demonstrate that any analysis of changes in the price levels requires a detailed understanding of changes in both money stocks and money flows (especially liquidity preferences) but also changes in the real economy, as represented by y:? i.e., changes in population, technology, economic organizations, real capital investments, etc.? In my recent publications involving coinage debasements, I have sought to prove that in late-medieval and early-modern Europe, increases in M never resulted in proportional increases in the price level, even during Henry VIII?s Great Debasement (Munro 2011, 2012a, 2012b). None of this constitutes the supposed ?monetarism? that Bolton portrays, except to indicate that ?money matters? (a proposition that Bolton admittedly never denies).
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Bolton?s specific goal, in the final two chapters, 8 and 9, is to prove that increases in the supply and use of various credit instruments fully offset the two supposed ?bullion famines?: those from ca. 1375 to ca. 1420 and from ca. 1440 to ca. 1480.? Indeed, his focus on the expanding role of credit allows him fully to accept the nature and extent of these two ?bullion famines? as portrayed by so-called ?monetarists,? in contrast to the published views of the current group of ?anti-monetarist? historians (such as Sussman 1990, 1993, 1995, 1998, 2003).? He thus accepts the three prevailing theses to explain that coinage scarcity: a severe decline in outputs of European silver and gold mines; the disruptions in the trans-Saharan African gold trade to the Mediterranean; and increased bullion outflows to the East, particularly for purchases of Asian spices and other luxury goods.? But this third thesis seems inconsistent with his view that late-medieval England always enjoyed a surplus in its balance of payments with the continent. I myself am far from convinced that any payments deficit with the East, so chronic from Roman times, became proportionately worse during the later-Middle Ages, especially because the specific evidence adduced in favor of this thesis (from Ashtor 1971, 1983) comes from the 1490s, when the Central European mining boom, having commenced in the 1460s (peaking in the 1530s) was supplying vast new quantities of silver to promote increased Venetian trade with the Levant (Munro 2003a).? The more significant of these factors, therefore, may have been the reduction in European inflows of African gold, from the 1370s: a trade that the Portuguese later sought to restore, from the 1440s, and with considerable success from the 1470s.
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What Bolton neglects to consider as a major factor in these ?bullion famines? is changes in Cambridge k (and thus in V): i.e., an increased liquidity preference in the form of hoarding ? not by burying precious metals in the ground but by converting them into plate and jewelry, readily changeable back to coin, in times of war-induced taxation.? The one (other) historian who has given such emphasis to changes in liquidity preference and hoarding (?thesaurisation?), as a reaction to general economic pessimism and risk aversion in times of chronic plague, other forms of depopulation, economic contraction and periodic depressions, is Peter Spufford (1988); but Spufford still places greater emphasis on the roles of the European mining slump and bullion outflows to the East.

Bolton obviously does not wish to entertain the Spufford thesis ? which necessarily implies a decrease in the income velocity of money ? because he seeks to show that an increased use of credit fully offset the bullion famines by increasing either V or M or both.? In this debate, on the role of credit, his chief opponent is Pamela Nightingale (1990, 1997, 2004, 2010), and indeed the two have continued this debate is recent issues of the British Numismatic Journal (2011, 2013).? I continue to support Nightingale.? That might seem obvious for one accused of being a ?monetarist,? so that readers of this review must judge for themselves by a careful examination of their respective publications (and the others cited here).? In my view, Bolton fails to refute or contradict Nightingale?s two major propositions.? The first, and most important, is that the supply of credit remained essentially a function of the coined money supply, because most (if not all) credit transactions depended on the use of coin, and especially on the creditor?s confidence of being fully repaid in coin:? so that credit generally expanded with increases in the coined money supply and conversely contracted with any decline in the supply or circulation of coined money, often disproportionately.? On this important issue, Nightingale receives full support from many other monetary historians: Peter Spufford (1988), Nicholas Mayhew (1974, 1987, 1995, 2004), Reinhold Mueller (1984: for Italy), Frank Spooner (1972: for France), and most recently (if less strongly) Chris Briggs (for England: 2008, 2009).? Nightingale?s? second proposition, also endorsed by most of these historians, is that the wide variety of credit instruments used in late-medieval England were not yet negotiable, and thus, while affecting velocity (V), they did could not and did not add to the money supply (M) ? though the differences between the two may here be moot.? To be sure, many of these credit instruments were, and long had been, assignable ? transferable to third parties.? But as Eric Kerridge (1988) ? whom Bolton cites for other purposes ? long ago stressed: ?transferability is not negotiability,? a point that Michael Postan had also earlier made (1928, 1930), despite Bolton?s assertions to the contrary. The fully developed legal institutions required for secure negotiability of commercial bills, in protecting the full rights of assignees and bearers to claim and enforce payment on redemption, were first established in the Habsburg Netherlands by imperial legislation enacted in 1537 and 1541, as Herman Van der Wee has clearly demonstrated (1963, 1967, 1975, 2000),? Not until the early seventeenth century do we find comparable full-fledged English acceptance of negotiability and no national legislation until the Promissory Notes Act of 3 & 4 Anne c. 8 (1704).
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Equally essential for full negotiability was the legal acceptance of discounting, a problem related to the issue of usury, given short shrift not only by Bolton but also by Nightingale and most other financial historians (except, notably, De Roover 1967, also in Kirschner 1974).? To be sure, we may fairly assume that many medieval creditors did disguise interest in a loan by increasing the amount stipulated for repayment; but disguising such implicit interest was far more difficult to achieve in discounting (selling a bill for less than face value before redemption).? As Van der Wee has also demonstrated for the Habsburg Netherlands, discounting, along with multiple transfers by endorsement, spread only after an imperial ordinance, issued in October 1540, explicitly permitted interest payments on commercial loans up to 12%.? He also demonstrated that nominal interest rates in the Netherlands dropped sharply in this era, by almost half: from 20.5% in 1511-15 to 11.0% in 1566-70; real rates dropped even further with the inflation of the Price Revolution.? Similarly, according Norman Jones (1989), an even sharper fall in English interest rates on commercial bills took place after Elizabeth I, in 1571, restored her father?s abortive statute (1545) permitting interest payments up to 10%: from about 30% in the 1560s to 10% by 1600, with further declines in the seventeenth century, to about 5% (see also Homer and Sylla 1997, pp. 89-143; Munro 2012c).? Bolton has also not taken account of the significantly increased restrictions on the use of credit in fifteenth century England, from both anti-usury and bullionist legislation, and also the prevailing social attitudes that remained deeply imbedded until the early Stuart era. As Lawrence Stone (1965) so aptly commented on Elizabethan England: ?Money will never become freely or cheaply available in a society which nourishes a strong moral prejudice against the taking of any interest at all. ? If usury on any terms, however reasonable, is thought to be a discreditable business, men will tend to shun it, and the few who practise it will demand a high return for being generally regarded as moral lepers.?
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If we were to accept, instead, Bolton?s contentions that an increased use of credit fully offset the coined money scarcity evident in the two bullion famines, then we would then be hard pressed to explain the sharp deflation of these two periods.? Bolton evidently sees no need to do so, for his book, most surprisingly, contains no tables or graphs on the price level (CPI); he provides only one price graph, on relative prices for just wheat and oxen, from 1160 to 1350 (p. 183).? Demographic decline cannot itself explain the periods of deflation (apart from its possible impact on V).? For note that the Black Death (1348-49), quickly reducing population by about 40%, was followed by three decades of rampant inflation: when the Phelps Brown and Hopkins CPI (1451-75 = 100) rose from a quinquennial mean of 85.53 in 1341-45 to one of 136.40 in 1366-70, falling slightly to 127.35 in 1371-75.? Thereafter, the CPI fell to a low of 103.70 in 1421-25, for an overall decline of 23.94%, despite the 16.67% silver debasement of 1411-12.? Rising thereafter to a peak of 124.22 in 1436-40, the CPI fell by 25.40 % during the second ?bullion famine?: to a nadir of 92.667 in 1476-80, again despite the 20.0% silver debasement of 1464.? Recent alternative historical consumer prices indexes ? those by Robert Allen (2001) and Gregory Clark (2004, 2007), neither cited by Bolton ? show the same patterns of inflation and deflation demonstrated in the older Phelps Brown and Hopkins Composite Price index (1956, 1981: revised by Munro).
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Bolton consequently does not take full account of the negative economic consequences of deflation.? If all relative prices had moved together in tandem, with proportional changes, then neither deflation nor inflation would matter. But price changes have never done so, especially factor prices in relation to commodity prices.? In general, deflation raises the burden of factor costs for borrowers and entrepreneurs, while inflation reduces that cost burden.? The most familiar such phenomenon is downward nominal-wage stickiness ? so widespread throughout Western Europe, unaffected by demographic factors, and persistent in England itself until 1920 (Smith 1776/1937; Phelps Brown and Hopkins 1955/1981; Munro 2003b).? But nominal interest rates and land rents were generally also sticky in this era, especially when defined by contracts, though for much shorter periods.? Thus all these real factor costs rose, at least in the short run, with the fall in the Consumer Price Index. If creditors were more reluctant to lend in times of monetary scarcity and depression, for fear of non-payment, debtors were also reluctant to borrow more in facing prospects of higher real costs in payments of both interest and the principal.? For both creditors and debtors that reluctance, in especially the mid fifteenth century, may have been due as much to the adverse circumstances of the commercial depressions that accompanied that bullion ?famine? and deflation (Hatcher 1996; Nightingale 1997; Bois 2000).
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A final problem, and one that pervades much of the book, concerns the proper distinctions between bullion, coinage, and moneys-of-account, and the closely related problem of coin debasements.? Bolton ought to have followed the model set forth long ago by Sir Albert Feavearyear (1931/1963), whose absence from the bibliography is astonishing.? By this model, silver and gold coins, bearing the official stamp of the ruler, generally circulate by tale (official face value), commanding an agio or premium over bullion.? That agio represents the sum of the minting costs of brassage (for the mint-master) and seigniorage (a tax for the ruler), added to the mint?s bullion price; but also, for the public, it represents their savings on transaction costs in not having to weigh the coins and assay their proper fineness.? As Douglass North (1984, 1985) has demonstrated, transaction costs are always subject to considerable scale economies: thus they are a major burden in small-scale, low-valued silver transactions in retail trade and wage payments, but far less so in very large volume, high-valued transactions, especially those involving gold in wholesale and foreign trade and major debt transactions.? Bolton is very ambiguous on whether coins circulated by weight or by tale, ignoring the scale economies of transactions, but seemingly supporting the former view (despite his evidence presented on pp. 120-21).?
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An increased tendency for coins to be accepted only by weight, in higher-valued transactions, arose when the quality of the circulating coinage inevitably deteriorated over the years and decades following a general recoinage: when its silver contents diminished through normal wear and tear, but especially when? the coinage became more and more corrupted by the nefarious practices of clipping, ?sweating? and counterfeiting ? none of which would? have been profitable had coins earlier circulated by weight. Such deterioration, the loss of public confidence, and growing refusals to accept coins by tale meant that all coins lost their former agio, with four consequences.? First, merchants, still accepting coins by tale, sought compensation for perceived silver losses by raising their prices; second, good, higher-weight coins were culled and hoarded or exported, often in exchange for foreign counterfeits (Gresham?s Law); and third, bullion ceased to flow to the mints, so that the king lost? his seigniorage revenues.? Fourth, the king consequently had no alternative but to debase his coinage to bring it in alignment with the current depreciated circulation, thereby restoring the agio and resuming the flow of bullion to the mints.? In Feavearyear?s view, this purely defensive reaction to coinage deterioration explains all English silver debasements before Henry VIII?s Great Debasement of 1542-52: in particular, the 10.00% silver reduction of 1351; the 16.66% reduction of 1411/12; the 20.00% reduction of 1464; and the 11.11% reduction of 1526 ? so that fine silver content of the penny fell from 1.332 g in 1279 to just 0.639 g in 1526.? Henry VIII?s Great Debasement was undertaken, however, for purely fiscal motives (as had long been the continental pattern): to augment seigniorage revenues. But the evidence on seigniorage rate changes indicates that such fiscal motives had also prevailed in Edward IV?s silver and gold debasements of 1464-65 (Munro 2011).
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None of this analysis or any credible explanation for debasement can be readily found in Bolton, who even denies that English kings debased their coinages before the Great Debasement, on the overly literal grounds that the sterling silver fineness (92.5%) was always maintained (except for the 1336 issue of 10 dwt halfpence = 83.33% silver halfpence).? Almost all monetary historians define debasement instead as the reduction of the quantity of fine silver or gold in the money-of-account unit (pence, pound). That was achieved by a diminution in fineness (adding more base metal), and/or by a reduction in weight ? but also, for gold coins, by an increase in their official exchange rates.? Thus Edward IV?s initial debasement of gold in August 1464 was achieved by increasing the value of the traditional, physically-unchanged gold noble, from 6s 8d to 8s 4d.? In this respect, I also regret the absence, for a book on money in the medieval economy, of tables on English mint outputs (except for one graph on the Calais mint), in both pounds sterling and kilograms of fine metals, with related details on specific coinage issues in terms of weight, fineness, and mint charges ? though much of that information can be found in both Christopher Challis (1992) and Martin Allen (2011, 2012). ???
Other readers may, however, place much less emphasis on the issues raised in this review; and some, suspecting an unwarranted ?monetarist? bias in this review, may well support Bolton?s views, especially on the role of credit in the late-medieval economy.? Indeed, I must stress the significant contributions that Bolton has made in this field, especially those based on his ongoing research on the Borromei bankers (Milan), and the roles of other Italian merchant-banking firms in both English foreign and domestic trade, i.e. in London. As I indicated at the outset of the review, this book is one of the most important published in English economic history in the past two decades, and one in which the virtues well outweigh the defects.? I recommend that you buy it; if so, get the online bibliography now, before it disappears from the web.

References:

Allen, Martin (2011), ?Silver Production and the Money Supply in England and Wales, 1086 – c. 1500,? Economic History Review, 64: 114-31.
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Allen, Martin (2012), Mints and Money in Medieval England. Cambridge and New York: Cambridge University Press.
??? ???
Allen, Robert (2001), ?The Great Divergence in European Wages and Prices from the Middle Ages to the First World War,? Explorations in Economic History, 38: 411-47.

Ashtor, Eliyahu (1971), Les m?taux pr?cieux et la balance des payements du Proche-Orient ? la basse ?poque.? Paris: S.E.P.E.N.

Ashtor, Eliyahu (1983), Levant Trade in the Later Middle Ages.? Princeton: Princeton University Press.

Bois, Guy (2000), La grande d?pression m?di?vale: XIVe – XVe si?cles: le pr?c?dent d?une crise syst?mique. Paris: Presses Universitaires de France.

Bolton, James (2011), ?Was There a ?Crisis of Credit? in Fifteenth-Century England?? British Numismatic Journal, 81: 146-64.

Briggs, Chris (2008), ?The Availability of Credit in the English Countryside, 1400-1480,? Agricultural History Review, 56: 1-24.

Briggs, Chris (2009), Credit and Village Society in Fourteenth-Century England. Oxford and New York: Oxford University Press.

Challis, Christopher (1992), ed., A New History of the Royal Mint. Cambridge: Cambridge University Press.

Clark, Gregory (2004), ?The Price History of English Agriculture, 1209-1914,? Research in Economic History, 22: 125-81.

Clark, Gregory (2007), ?The Long March of History: Farm Wages, Population, and Economic Growth:? England, 1209-1869,? Economic History Review, 60: 97-135.

De Roover, Raymond (1967), ?The Scholastics, Usury, and Foreign Exchange,? Business History Review, 41: 257-71.
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Feavearyear, Albert (1931/1963), The Pound Sterling: A History of English Money, 2nd rev. edn. by E. V. Morgan. Oxford: Clarendon Press, 1963.

Hatcher, John (1996), ?The Great Slump of the Mid-Fifteenth Century,? in Progress and Problems in Medieval England, ed. Richard Britnell and John Hatcher.? Cambridge and New York: Cambridge University Press, pp. 237-72.

Homer, Sidney, and Sylla, Richard, A History of Interest Rates, 3rd rev. edn.? New Brunswick, N.J.: Rutgers University Press, 1996, pp. 89-143

Jones, Norman (1989), God and the Moneylenders: Usury and Law in Early Modern England.? Oxford: Basil Blackwell.

Kerridge, Eric (1988), Trade and Banking in Early Modern England. Manchester, Manchester University Press.

Kirshner, Raymond (1974), ed., Business, Banking, and Economic Thought in Late Medieval and Early Modern Europe: Selected Studies of Raymond de Roover. Chicago, University of Chicago Press.

Mayhew, Nicholas (1974), ?Numismatic Evidence and Falling Prices in the Fourteenth Century,? Economic History Review, 2nd ser., 27:? 1-15.

Mayhew, Nicholas (1987), ?Money and Prices in England from Henry II to Edward III,? Agricultural History Review, 35: 121-32.

Mayhew, Nicholas (1995), ?Population, Money Supply, and the Velocity of Circulation in England, 1300-1700,? Economic History Review, 48: 238-57.

Mayhew, Nicholas (2004), ?Coinage and Money in England, 1086 – 1500,? in Medieval Money Matters, ed. Diana Wood. Oxford: Oxbow Books, pp. 72-86.

Mueller, Reinhold (1984), ??Chome l’ucciello di passegio?: la demande saisonni?re des esp?ces et le march? des changes ? Venise au moyen ?ge,? in ?tudes d’histoire mon?taire, XIIe-XIXe si?cles, ed. John Day.? Lille: Presses universitaires de Lille, pp. 195-220.

Munro, John (2003a), ?The Monetary Origins of the ?Price Revolution?:? South German Silver Mining, Merchant-Banking, and Venetian Commerce, 1470-1540,? in Global Connections and Monetary History, 1470-1800, ed. Dennis Flynn, Arturo Gir?ldez, and Richard von Glahn.? Aldershot and Brookfield, Vt: Ashgate Publishing, pp. 1-34.

Munro, John (2003b), ?Wage-Stickiness, Monetary Changes, and Real Incomes in Late-Medieval England and the Low Countries, 1300-1500:? Did Money Matter?? Research in Economic History, 21: 185-297.

Munro, John (2011), ?The Coinages and Monetary Policies of Henry VIII (r. 1509-47),? in The Collected Works of Erasmus: The Correspondence of Erasmus, Vol. 14:? Letters 1926 to 2081, A.D. 1528, trans. Charles Fantazzi and ed. James Estes.? Toronto: University of Toronto Press, pp. 423-76.

Munro, John (2012a), ?The Technology and Economics of Coinage Debasements in Medieval and Early Modern Europe: with Special Reference to the Low Countries and England,? in Money in the Pre-Industrial World: Bullion, Debasements and Coin Substitutes, ed. John Munro, Financial History Series no. 20. London: Pickering & Chatto Ltd., pp. 15-32, 185-89 (endnotes).

Munro, John (2012b), ?Coinage Debasements in Burgundian Flanders, 1384-1482: Monetary or Fiscal Policies?? in Comparative Perspectives on History and Historians: Essays in Memory of Bryce Lyon (1920-2007), ed. David Nicholas, James Murray, and Bernard Bacharach.? Medieval Institute Publications, University of Western Michigan: Kalamazoo, pp. 314-60.

Munro, John (2012c), ?Usury, Calvinism and Credit in Protestant England: From the Sixteenth Century to the Industrial Revolution,? in Religione e istituzioni religiose nell?economia europea, 1000 -1800/ Religion and Religious Institutions in the European Economy, 1000 -1800, ed. Francesco Ammannati. Florence: Firenze University Press, pp. 155-84.
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Munro, John, The Phelps Brown and Hopkins ?Basket of Consumables? Commodity Price Series and Craftsmen?s Wage Series, 1265-1700: Revised by John Munro, available online in Excel, at www.economics.utoronto.ca/munro5/ResearchData.html.

Nightingale, Pamela (1990), ?Monetary Contraction and Mercantile Credit in Later Medieval England,? Economic History Review, 43: 560-75.

Nightingale, Pamela (1997), ?England and the European Depression of the Mid-Fifteenth Century,? Journal of European Economic History, 26: 631-56.

Nightingale, Pamela (2004), ?Money and Credit in the Economy of Late Medieval England,? in Medieval Money Matters, ed. Diana Wood.? Oxford: Oxbow Books, pp. 51-71.

Nightingale, Pamela (2010), ?Gold, Credit, and Mortality:? Distinguishing Deflationary Pressures on the Late Medieval English Economy,? Economic History Review, 63: 1081-1104.

Nightingale, Pamela (2013), ?A Crisis of Credit in the Fifteenth Century – Or of Historical Interpretation?? British Numismatic Journal, 83 (forthcoming).

North, Douglass (1984), ?Government and the Cost of Exchange in History,? Journal of Economic History, 44: 255-64.

North, Douglass (1985), ?Transaction Costs in History,? Journal of European Economic History, 14: 557-76.

Phelps Brown, E.H., and Hopkins, Sheila V. (1955), ?Seven Centuries of Building Wages,? Economica, 22 (87): 195-206; reprinted Phelps Brown and Hopkins (1981), A Perspective of Wages and Prices. London: Methuen, pp. 1-12

Phelps Brown, E. Henry; and Hopkins, Sheila V. (1956), ?Seven Centuries of the Prices of Consumables, Compared with Builders? Wage Rates,? Economica, 23 (92): 296-314: reprinted in Phelps Brown and Hopkins (1981), A Perspective of Wages and Prices.? London:? Methuen, pp. 13-39 (with price indexes not in the original).

Postan, Michael (1928), ?Credit in Medieval Trade,? Economic History Review, 1st ser., 1 (1928), 234-61, reprinted in Michael Postan (1973), Medieval Trade and Finance.? Cambridge: Cambridge University Press, pp. 1?27.

Postan, Michael (1930), ?Private Financial Instruments in Medieval England,? Vierteljahrschrift f?r Sozial- und Wirtschaftsgeschichte, 22 (1930), reprinted in Michael Postan (1973), Medieval Trade, pp. 28-64.

Smith, Adam (1776), An Inquiry into the Nature and Causes of the Wealth of Nations, ed. with introduction and notes by Edwin Cannan (1937), New York: Modern Library.

Spufford, Peter (1988), Money and Its Use in Medieval Europe, Cambridge: Cambridge University Press, pp. 339-62.

Spooner, Frank (1972), The International Economy and Monetary Movements in France, 1493-1725. Cambridge, MA: Harvard University Press.

Stone, Lawrence (1965), The Crisis of the Aristocracy, 1558-1641, Oxford: Clarendon Press; reissued 1979, with some corrections.

Sussman, Nathan (1990), ?Missing Bullion or Missing Documents: A Revision and Reappraisal of French Minting Statistics: 1385-1415,? Journal of European Economic History, 19:147 -62.

Sussman, Nathan (1995), ?Minting Trends in France and the Bullion Famine Hypothesis: Regional Evidence (1384-1415),? in Fra spezio e tempo: studi in onore di Luigi de Rosa, ed. I. Zili. Naples: Edizione scientifiche Italiane.

Sussman, Nathan (1998), ?The Late Medieval Bullion Famine Reconsidered,? Journal of Economic History, 58: 126-54.

Sussman, Nathan, and Zeria, Joseph (2003), ?Commodity Money Inflation: Theory and Evidence from France in 1350-1430,? Journal of Monetary Economics, 50: 1769-93.

Van der Wee, Herman (1967), ?Anvers et les innovations de la technique financi?re aux XVIe et XVIIe si?cles,? Annales: E.S.C., 22: 1067-89, republished as ?Antwerp and the New Financial Methods of the 16th and 17th Centuries,? in Van der Wee, Herman (1993), The Low Countries in the Early Modern World , trans. by Lizabeth Fackelman, Variorum Series: Aldershot, pp. 145-66.

Van der Wee, Herman (1975), ?Monetary, Credit, and Banking Systems,? in The Cambridge Economic History of Europe, Vol. V: The Economic Organization of Early Modern Europe, ed. E. E. Rich and Charles Wilson.? Cambridge: Cambridge University Press, pp. 290-393.

Van der Wee, Herman (2000), ?European Banking in the Middle Ages and Early Modern Period (476-1789),? in A History of European Banking, 2nd edn., ed. Herman Van der Wee and G. Kurgan-Van Hentenrijk,? Antwerp: Mercator, pp. 152-80.

John Munro is Professor Emeritus of Economics at the University of Toronto, specializing in the economic history of the late-medieval Low Countries and England, with a focus on money and textiles.? His recent publications in monetary history (2011 – 2012) are listed in the bibliography above; he has also recently published:? ?The Rise, Expansion, and Decline of the Italian Wool-Based Cloth Industries, 1100 -1730:? A Study in International Competition, Transaction Costs, and Comparative Advantage,? Studies in Medieval and Renaissance History, 3rd series, 9 (2012), 45-207.

Copyright (c) 2013 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator@eh.net). Published by EH.Net (June 2013). All EH.Net reviews are archived at http://www.eh.net/BookReview

Subject(s):Financial Markets, Financial Institutions, and Monetary History
Geographic Area(s):Europe
Time Period(s):Medieval

Surviving Large Losses: Financial Crises, the Middle Class, and the Development of Financial Markets

Author(s):Hoffman, Philip T.
Postel-Vinay, Gilles
Rosenthal, Jean-Laurent
Reviewer(s):Bodenhorn, Howard

Published by EH.NET (July 2007)

Philip T. Hoffman, Gilles Postel-Vinay and Jean-Laurent Rosenthal, Surviving Large Losses: Financial Crises, the Middle Class, and the Development of Financial Markets. Cambridge, MA: Harvard University Press, 2007. viii + 263 pp. $28 (hardcover), ISBN: 978-0-674-02469-4.

Reviewed for EH.NET by Howard Bodenhorn, Department of Economics, Lafayette College.

Those of us who knew some financial history were not surprised by the Enron and WorldCom collapses in 2001 and 2002. We may have been taken aback by the magnitude of the losses and empathized with Enron employees who saw comfortable retirements evaporate before their eyes, but I can recall more than one dire prediction as Y2K approached and not because anyone really believed that confused computers would turn out the lights. Rather, some of us had genuine concerns that the equity market mania in 1999 resembled that of 1929 and hoped that the Fed would get it right the second time around. Optimism reigned at cocktail parties, however, and statements about unsustainably high equity prices were casually dismissed as just one more example of economists’ collectively predicting 11 of the past 10 recessions. History warned us that the collapse was not a matter of “if.” It was a matter of “when.” While this sense of inevitability now sounds like so much “I-told-you-so” hindsight, Surviving Large Losses makes a case that the then minority opinion was reasonable. The book makes the case that financial crises are inevitable. What is not inevitable is how societies respond as the pieces are picked up after the crisis.

Philip T. Hoffman (Caltech), Gilles Postel-Vinay (?cole des Hautes ?tudes en Sciences Sociales) and Jean-Laurent Rosenthal (Caltech) recognize their debts to the finance-growth literature, exemplified by Ross Levine’s many and influential cross-country studies, and the equally influential La Porta, Lopez-de-Silanes, Shleifer and Vishny (LLSV) “law and finance” literature, which holds that a country’s financial system is heavily influenced by the legal protections offered to equity and debt holders.[1] As influential as the related Levine and LLSV literatures are, cross-country analyses labor under two fundamental shortcomings. First, they ignore the powerful historical forces that shape a country’s financial institutions and infrastructure, the “colonial origins” argument at the center of LLSV notwithstanding. For a host of reasons, many of which are explored in this book, countries become prisoners of their own pasts, but the story is far more complex than colonial origins. Second, both literatures identify, but cannot explain a growth nexus, though some progress on that front has recently appeared.[2] That is, the size and structure of a country’s financial system matters for long-run growth, but the analyses fail to explain why and how they matter and, more importantly, why and how they change. If success can be had by simply copying the successful, why have so many economies failed to do so? The short answer, of course, is that institutional change is not costless. No matter how inefficient an existing financial system, its costs and benefits are capitalized by economic actors who will resist change absent some outside impetus that alters the calculus.

Surviving Large Losses provides an original and provocative hypothesis that offers an interpretation of financial reform: historically, one of the most important moving forces behind financial evolution has been the financial crisis. It is a fact that financial crises are virtually inevitable in modern economies ? a source of sleepless nights, if not outright dread, for even the most sophisticated, well-hedged investor. Despite the enormous human costs of financial crises, “they often prove to be turning points in the evolution of financial markets and long-term economic growth” (p. 2). Because crises are followed by searches for culprits and insistent calls for change, they afford politically opportune moments to reform financial institutions. In the U.S., for example, the Federal Reserve System and the Federal Deposit Insurance Corporation, two fundamental building blocks of the twentieth century U.S. banking edifice, emerged as post-crisis reforms. These reforms demonstrate that something new and functional can be built on the ashes of the old and broken.

Although the authors offer a political economy model of post-crisis financial reform, they do not arrive at their conclusions by analyzing historical data ? though they have performed such analyses elsewhere. Instead, they take a decidedly low-tech, narrative approach to appeal to the widest possible audience. After providing a verbal explanation of their political economy model, the authors rely on their extensive historical knowledge of about four centuries of financial crises to support their interpretations.

The substantive chapters of the book open with a fundamental question: Why is it that some states protect savers and investors while others plunder? Every state, no matter how wealthy or democratic is capable of plunder, but those that resist grow over the long term. What increases the probability of plunder is the size of the public debt relative to the state’s ability to service it. Countries with small debts and low taxes relative to GDP are less likely to prey on financial markets (p. 12-13). Countries mired in public debt and with already heavy tax burdens have few politically viable options during a crisis other than default or confiscation. In many societies, preying on the military or a hungry electorate instead of the rentiers is a sure ticket for a short reign (p. 14-15).

In issuing public debt the state plays a critical role at the extremes. At one extreme is the state whose issuance of debt leads to the emergence of debt markets with institutions suitable to and organizations capable of trading private claims. So long as the state restrains itself, an entrepreneurial class gains access to an expanding web of finance with positive consequences for long-term economic development.[3] At the other extreme is the state that piles up enormous debts and pays for them by preying on financial markets. To avoid the predator, investment capital hides or flees with obvious negative consequences for long-term growth.

How do crises matter in this process? Financial markets shrink during a crisis and investors call for change in the aftermath. Whether change occurs, how change is initiated, and who initiates it ? government or private actors ? are issues determined through the interaction of political economy and historical accident. Part of the answer depends on who demands post-crisis change and whether the demands for change are translated into productive and efficient institutions (the preferred outcome) or whether losers use the political system to confiscate from winners however defined (the undesirable outcome) or something in between.

Hoffman, Postel-Vinay and Rosenthal argue that the outcome turns on the behavior of three actors ? the middle class, financial intermediaries, and the government. Casual observers might think that the wealthy would be the driving force behind post-crisis reform. But, as the authors note, it is a broad, relatively egalitarian middle that drives financial development, as well as the political economy of reform. Entrepreneurs tend to emerge from the middle. The middle has collateral. The middle relies on local financial institutions. The middle is most vulnerable to crises.

Although the middle’s favored short-term post-crisis strategy might be a bailout and redistribution, enough members of the group usually recognize that institutional reforms that strengthen the financial system and insulate it from transient shocks are the preferable long-term strategy. A more vibrant, more efficient financial system benefits them directly (diversification) and indirectly (spurring macroeconomic growth). Whether the middle class realizes their calls for reform depends on its size and its political clout relative to the wealthy. Egalitarian societies with a broad middle are most likely to initiate useful reform because the benefits of confiscation are small ? mostly because the middle will be confiscating from itself ? and because the benefits of crisis-averting innovation are large.

Whether the middle succeeds depends on the objectives of the second principal player: financial intermediaries. It is in this arena that a society’s wealthy play an important role. Because the wealthy have (very nearly by definition) large portfolios, they are able to spread the fixed costs of innovative new products across a raft of customized financial products. But once financial intermediaries have designed products for the wealthy, it is only a matter of time before they are made available to consecutively less wealthy investors until they are eventually redesigned to suit the needs of the middle. A recent example of increasing regulatory concern is the growing upper-middle class fascination with hedge funds.

Crises, as Hoffman, Postel-Vinay and Rosenthal note, have many causes, including government predation, herd behavior, asymmetric information, and inadequate diversification. If intermediaries see post-crisis profit opportunities and can expect governmental or legal support for reforms and new products that reduce the negative consequences of information asymmetries (i.e., new reporting requirements imposed by stock exchanges for listing companies) and enhance diversification (i.e., mutual funds), they will push for reform.

Government is the third principal player in the drama. Government differs from private actors because a private actor must realize a profit from any innovation or it will be driven from the market. Governments face no such constraint and can, in fact, impose taxes and other regulatory costs to pursue the changes it deems appropriate. Government has a prominent role in financial markets ? from enforcing contracts to subsidizing deposit insurance to overcoming some types of market failures ? but there is a constant fear of governmental overreach, predation, and the encouragement of rent seeking. Governmental intervention is successful when the net social benefits of a proposed reform outweigh its costs and when the rents created are small relative to the benefits of resolving the market failure (p. 169).

What is the authors’ interpretation of massive state intervention in financial markets in modern Western-style economies? They argue that it was an outgrowth of the bloody and tumultuous twentieth century. Governments intervened on a modern scale during the First World War when national survival seemingly demanded planning boards, rationing and conscription of men and materiel, including middle-class savings. The Great Depression induced a second wave of massive intervention and regulation. The Second World War, post-war reconstruction and the Cold War elicited even greater government intervention. Thus, the period between 1914 and 1990 was one of massive and increasing governmental regulation.

How did the Western-style economies realize their remarkable rates of growth in the twentieth century if financial markets labored under the ever increasing weight of government regulations? The authors argue that these countries “got away with it” because, as the century opened, they already had good institutions in place and governments, while highly regulatory, were rarely predatory. Low-income and low-growth developing countries that copied, or tried to copy, the regulatory structures of the West failed because they did not begin with the same pro-growth institutions.

In the end, then, Surviving Large Losses, while more historically nuanced than the finance-growth and law-and-finance literatures from which it springs leaves us in much the same place. Political economy takes us only so far. A large part of the story of good finance is historical contingency, which makes for a less parsimonious tale than that offered by LLSV and others, but one more satisfying to economic historians. Nevertheless, we are left to wonder how the financial institutions that matter emerge and thrive. The authors’ explanation hangs mostly on the existence of a middle class but that, too, depends on a preexisting set of “good” social, political, economic and governmental institutions. Surviving Large Losses is, therefore, probably best viewed as a low-tech contribution to the literature attempting to unbundle institutions. It is certainly thought provoking and leaves as many questions as answers. Before its interpretations carry the day, however, much more theoretical and empirical work will need to be done. Although the conclusions drawn from many historical episodes will appeal to economic historians and general readers, I suspect that mainstream banking and finance types will withhold judgment until many more formal tests are provided. I look forward to seeing those tests and expect the authors of Surviving to be notable contributors.

Notes: 1. See Ross Levine, “Financial Development and Economic Growth: Views and Agenda,” Journal of Economic Literature 35:2 (June 1997), 688-726 and Ross Levine and Thorsten Beck, “Stock Markets, Banks and Growth: Panel Evidence,” Journal of Banking and Finance 28:3 (March 2004), 423-42; Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer and Robert W. Vishny, “Law and Finance,” Journal of Political Economy 106:6 (December 1998), 1113-55.

2. Thorsten Beck, Asli Demirguc-Kunt, and Ross Levine, “Law and Finance: Why Does Legal Origin Matter?” Journal of Comparative Economics 31:4 (December 2003), 653-75; and Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer, “What Works in Securities Laws,” Journal of Finance 61:1 (February 2006), 1-32.

3. Richard Sylla, “U.S. Securities Markets and the Banking System, 1790-1840,” Federal Reserve Bank of St. Louis Review 80:3 (May 1998), 83-98 makes the case for the early U.S.

Howard Bodenhorn, professor of economics at Lafayette College and Research Associate at NBER, has written extensively on banking history. Among his recent articles is “Usury Ceilings, Relationships and Bank Lending Behavior: Evidence from the Nineteenth Century,” Explorations in Economic History (2007).

Subject(s):Markets and Institutions
Geographic Area(s):General, International, or Comparative
Time Period(s):18th Century

Technology Matters: Questions to Live With

Author(s):Nye, David E.
Reviewer(s):Szostak, Rick

Published by EH.NET (June 2006)

David E. Nye, Technology Matters: Questions to Live With. Cambridge, MA: MIT Press, 2006. xiv + 282 pp. $28 (cloth), ISBN: 0-262-14093-4.

Reviewed for EH.NET by Rick Szostak, Department of Economics, University of Alberta.

In this book, David Nye (Professor of Comparative American Studies and History at Warwick University) devotes a chapter each to ten important questions regarding the causes and effects of technological innovation. Most of these questions — including the effects of innovation on the environment, employment, and culture — are subjects of contentious public discourse. The book seems aimed at clarifying these issues for a general audience, though Nye notes that scholars are often guilty of misunderstanding the course of technological change.

The first chapters are the most satisfying. While Nye could have been a bit more precise in answering “what is technology?,” the first chapter does a good job of describing the phenomenon of technological innovation as well as some of the other phenomena to which it is closely linked. The second chapter provides a very good critique of both technological determinism and the idea that the course of technological innovation is inevitable, and the third discusses the severe limitations of technological predictions.

The fourth chapter asks how historians understand technology. Nye may underestimate the size of the minority that fails to follow the set of good practices he suggests. Historians should eschew determinism and predictability. Nye suggests that historians of technology give roughly equal weight to technology, politics, the economy, and society (by which he largely means ‘culture’) in their analyses. He applauds the complementarity between ‘internalist’ (focused on technical developments) and ‘contextual’ history, but does not note that the field of history of technology has swung sharply between these two orientations in the postwar period. He applauds historians for increasingly focusing on incremental innovations and the long process of development, and thus downplaying the role of the ‘heroic inventor.’

At times in the early chapters Nye is too strident in his anti-determinism. In chapter 4, he finally appreciates, following Thomas Hughes, that technological systems once in place constrain further technological and social choices. Only in later chapters does he recognize in passing that even individual innovations provide both constraints and incentives: they do not determine but certainly exert causal influence on a range of individual and societal decisions.

While Nye strives in the first four chapters to provide answers to his questions, the latter chapters tend to provide conflicting arguments regarding the effect of technology on various other phenomena. Though the information provided is useful and accurate, many readers may wish that Nye had more clearly attempted to weigh the relative importance of these arguments. Nye relies throughout the book on powerful examples rather than a careful attempt to delineate the typicality of these, and thus the reader has little guidance in choosing which examples to place greatest confidence in. The lack of subtitles in any of the chapters exacerbates the difficulty of comparing one line of argument to another.

Yet I do not wish to be harsh. Nye’s goal, it seems, is to debunk some strongly held but simplistic views of technology. As noted above, the earlier chapters strive to convince readers that technology is not some inevitable force inexorably shaping our lives (whether to good or evil effect) but rather that human actors shape innovation in a host of ways. Later chapters then provide counter-examples against simplistic beliefs that technology necessarily destroys local cultures, ruins the environment, causes unemployment, and reduces human security. Nye notes that some technologies such as the personal computer work against cultural conformity, while consumers shape the effects of other technologies such as mass production in ways that preserve autonomy. (Again a more careful statement of how technology may limit but not determine choices would have been helpful.) Likewise, technological innovation can at times aid the environment (though most of the chapter on the environment addresses the question of whether humans should lessen their wants rather than expand their production). Nye details how the idea of technological unemployment has been around for centuries but unemployment rates have not risen secularly (he skips over the question of whether medium-term technological unemployment was observed during the Great Depression and 1970s). And Nye notes that technology has freed many humans from the insecurities associated with hunger and disease while creating new sources of insecurity.

A book that covers such a wide scope lends itself to inevitable quibbles. The unwary reader may be needlessly confused in the first chapter between the essence of technology and the causal relationships of which it is part. Nye’s discussion of predictability clearly distinguishes between major and incremental innovations, but leaves the impression that the latter are virtually as unpredictable as the former. Nye’s discussion of culture largely misses the key question of how strong the link is between the available range of consumer goods and the beliefs and attitudes that lie at the heart of culture: those who decry cultural homogenization are often guilty of implying that what one wears and eats defines who one is. The chapter on the environment skips the entire debate between optimists and pessimists. The chapter on employment discusses (uncritically) how work effort has increased in some ways in recent years, but largely ignores the amazing decline in the length of the workweek in previous centuries. And the chapter on whether technology should be regulated fails to suggest any criteria for distinguishing cases such as new pharmaceuticals where some sort of oversight may be a good idea from other technologies where markets can best adjudicate.

This is a handy book to recommend to students (or colleagues) who need an antidote to the more simplistic versions of technological determinism, environmentalism, or cultural decline that circulate on university campuses. The range of detailed historical examples utilized by Nye is quite impressive. Many students will be encouraged by the book to a more nuanced perspective, and guided to further reading. Others, unfortunately, may find it hard to integrate the information provided into a coherent understanding of the issues at stake.

Rick Szostak is Professor of Economics at the University of Alberta, and will be visiting the Department of History and Civilization at the European University Institute in Florence during 2006-7. He intends to write a book, Exogenous Growth: Interdisciplinary Perspectives. Recent publications include Technology and American Society: A History (with Gary Cross, second edition, 2004), Classifying Science: Phenomena, Data, Theory, Method, Practice (2004); “Evaluating the Historiography of the Great Depression: Explanation or Single-Theory Driven?” (Journal of Economic Methodology, 2005); “Allocating Scarce Shoreline: Institutional Change in the Newfoundland Inshore Fishery” (with Ken Norrie, Newfoundland and Labrador Studies, 2005) and “Economic History as It Is and Should Be” (Journal of Socio-Economics, 2006). He has recently completed a book manuscript, Restoring Human Progress: Transcending the Postmodern Condition.

Subject(s):History of Technology, including Technological Change
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

The Rise of Commercial Empires: England and the Netherlands in the Age of Mercantilism, 1650-1770

Author(s):Ormrod, David
Reviewer(s):Hohenberg, Paul M.

Published by EH.NET (December 2003)

David Ormrod, The Rise of Commercial Empires: England and the Netherlands in the Age of Mercantilism, 1650-1770. New York: Cambridge University Press, 2003. xvii + 400 pp. $75 (cloth), ISBN: 0-521-81926-1

Reviewed for EH.Net by Paul M. Hohenberg, Department of Economics, Rensselaer Polytechnic Institute.

The late Charles Kindleberger liked to quote an unnamed physicist to the effect that “everything is much more complicated than most people think.” He was an economist who turned to economic history, yet it is usually scholars coming to the subject from history who assert the complexity of the individual case as a critique of the sweeping generalizations and simplified, universal models that economists favor. The present volume can stand as evidence in favor of the view that things indeed get complex when one digs deeply into any subject. David Ormrod (Senior Lecturer in Economic and Social History at the University of Kent in Canterbury, England) has been exploring the commerce of England and Holland in the early modern period for many years. The present book is an outgrowth of research begun for his doctoral dissertation (completed in 1973) and presented at a Montreal colloquium the next year, whose bi-lingual Proceedings this reader happened to co-edit (1975). In fact, the book limits itself pretty much to the commerce of the North and Baltic Seas and to the related industries. Long-distance trade and financial matters get much less attention.

Ormrod has cast his progress through the thickets of history in the framework of recent debates on the role of institutions, notably the central state, in the process of economic development. He sides with those, such as Epstein (2000), who see a positive role for the activist state, and by inference against the view championed by Douglass North and others that government’s main contribution is to reinforce property rights and then stay out of the way. The rise of Britain can be attributed, Ormrod argues, largely to successful and sustained mercantilism. Messy and drawn out its execution may have been, but the combination of policies represented by the Navigation Acts, a strong navy, and protectionism resulted in Britain’s capturing gains from trade as well as achieving fruitful import substitution. The argument is fairly persuasive, although one thinks of the year 1776, after a century or so of such “success,” and recalls two events: the rebellion of the most populous colonies and Adam Smith’s magisterial rejection of the whole mercantilist paradigm.

The book focuses tightly on England and the Netherlands (really Holland), and somewhat more on the first. It is clear that including France and Spain, for instance, would have brought out the limits of British government action and the beneficial effects of this relative restraint. The binary comparison points up the role of the British state, and may therefore slight the crucial response of the private sector to the opportunities that mercantilist policies opened up. Still, the idea that development owed a lot to long-sustained and purposeful political action in an age of radical social inequality is worth pondering since it is so distinctly unfashionable — somewhat akin to challenging the prevailing skepticism regarding China’s current strategy of vigorous economic reform coupled with glacial political change. Can it really work for any length of time?

The book does address the long-running debate about Holland, of course. Did the Republic “decline” in the eighteenth century, and if so, why? Here Ormrod takes issue with Jan de Vries and Ad van der Woude who defiantly label the Dutch economy “modern” (1997). In Ormrod’s view, since state formation and action proved critical to development, the Dutch Republic should be seen by contrast as the last — and most highly developed — of the pre-modern city states (really a federation of city states). A strong central state presiding over a unified domestic market is the true sign of modernity, on this showing, something the Dutch did not develop. And, of course, if British growth indeed owed much to mercantilist policies, then Dutch decline is a direct corollary. Mercantilism was after all based on a view of the world as very nearly a zero-sum game. Growth and decline may be relative, but hegemony or leadership is not.

English mercantilism was in large part about acquiring market power in trade, as well as reducing that of their rivals. What had made the Dutch prosperous was not just trade, but trade with market power, along with efficient intermediation, from shipping and entrepot trade to banking. Competition, notably from England, hurt Dutch profits even more than the volume of Dutch trade, even as Britain adopted effective Dutch practices. In fact, Ormrod appears to argue that part of the Dutch problem came from tying up capital in low-margin lines. Another economic aspect that figures strongly in the book is the trade-off between tariffs and taxes to finance the state, especially in times of frequent conflict. While protection can be costly in partial equilibrium — less so when one works the infant-industry game as well as the English did — tariff revenues, even net of rebates, etc., did help keep taxes in Britain lower than in the Netherlands.

Of course another, more materialistic interpretation of Dutch difficulties is consistent with the evidence, and it too is part of Ormrod’s story. The Republic was vulnerable as a (natural) resource-poor country heavily dependent on trade for its subsistence, its wealth, and its employment, including processing industries such as dyeing, printing, and food processing. The energy sector is telling. The one domestic Dutch source, wind aside, was peat, a depletable asset with no real scope for innovation. England, on the other hand, had enough coal for a couple of centuries of industrial development, and developed steam engines as well as coal-based metallurgy to help mine, transport, and consume the superior fuel. Diminishing returns on one side and a stimulus to enormous technological change on the other: who cares about institutions!

I have tried to bring out the bones of Ormrod’s thesis, but the potential reader needs to be warned that they are pretty well buried in the book itself. This is no easy read. Most of the text consists of dense discussion of details, significant to be sure, but not always easy to relate to the larger questions. Sources, data, business organization, and earlier interpretations are subjected to thick description and close analysis. Long chapters cover trade in wool, linen, grain, and coal, as well as shipping, commercial policy, and the Dutch staplemarket. Part of the problem no doubt stems from the fact that this is a reworking of much older material, part also from a Weltanschauung that shuns simplification and revels in the fruits of archival research. Still, the patient reader can find here much information and fodder for some important questions. As for what is modern, that debate will no doubt go on.

References:

Jan de Vries and Ad van der Woude, The First Modern Economy: Success, Failure and Perseverance of the Dutch Economy, 1500-1815 (New York: Cambridge University Press, 1997).

Stephan R. Epstein, Freedom and Growth: The Rise of States and Markets in Europe, 1300-1750 (New York: Routledge, 2000).

Frederick Krantz and Paul M. Hohenberg, editors, Failed Transitions to Modern Industrial Society: Renaissance Italy and Seventeenth-Century Holland (Montreal: Interuniversity Centre for European Studies, 1975).

Paul M. Hohenberg is Professor Emeritus of Economics at Rensselaer Polytechnic Institute. He is the author, with Lynn Hollen Lees, of The Making of Urban Europe, 1000-1994 (Harvard University Press, 1995).

Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):18th Century

Poverty from the Wealth of Nations: Integration and Polarization in the Global Economy since 1760

Author(s):Alam, M. Shahid
Reviewer(s):Eng, Pierre van der

Published by EH.NET (January 2003)

M. Shahid Alam, Poverty from the Wealth of Nations: Integration and

Polarization in the Global Economy since 1760. Basingstoke: Palgrave, 2000.

xv + 215 pp.$69.95 (hardcover), ISBN: 0-312-23018-4.

Reviewed for EH.NET by Pierre van der Eng, School of Business and Information

Management, Australian National University.

This book basically seeks to answer a question that has confounded many

authors: Why did the West become so much richer than the rest? Where David

Landes took more than 500 pages to address this question, M. Shahid Alam,

Professor of Economics at Northeastern University in Boston (USA), requires

just 180 pages of text. Of course it is possible to give a brief answer if you

keep it simple. Alam’s answer is simple: today’s less-developed countries

suffered from a lack of autonomy as a consequence of European imperialism since

the mid-eighteenth century. As colonies and dependencies, they were not allowed

to map out their own future, invest in education and infrastructure, and —

more importantly — use trade barriers to pursue import-substituting industrial

policies on which to base their further industrialization and development.

There are some nuances, but that’s basically it.

How does Alam arrive at this conclusion? Not by meticulously dissecting the

economic history of less-developed countries and the processes of colonization,

but by raking over some of the existing literature and by cranking

cross-country panel data in chapter 6 that seems to be the meat in this slender

publication.

The author is so taken by his thesis that every chapter, including the preface,

restates it at some stage in some form. For instance, the introductory chapter

is not a preamble to the issue that will be investigated and the hypotheses

that are to be tested, but is a summary of the rest of the book. Without having

read the substantiation in other chapters, a reader who expects an introduction

may find it hard to understand why Alam churns out one sweeping statement after

another, without substantiation or explanation. For instance: “…lagging

countries which were free [i.e., not colonized] and chose to resist the logic

of international integration — to save, shore up and modernize manufactures,

enterprises and skills — continued to industrialize, to grow and to narrow

their economic distance behind the advanced countries” (p. 5). It is unclear

which countries are meant, or whether any concrete examples actually fit this

typification. Perhaps Japan does, but does Mexico or Afghanistan?

Chapter 2 may be of interest to economic historians, because it surveys the

available literature on the history of global disparities in income and living

standards. For instance, Shahid Alam compares historical estimates of GDP per

capita provided by Bairoch and Maddison. Largely by accepting Bairoch’s

estimates, he establishes that around 1760 per capita incomes in Western Europe

and the rest of the world were broadly comparable and that disparities have

increased since. The author omits a probing of the sources that led Bairoch and

Maddison to arrive at different estimates for the early nineteenth century. Had

he done this, he may not have accepted Bairoch’s estimates for the early period

so readily.

Chapter 3 is an historical overview of the views of economists on international

trade and investment. The bad guys are Smith and Ricardo and ‘orthodox

economists’ who propagated the concept of comparative advantage, and the

benefits of free trade as ideology rather than science, oblivious of the

“growing polarization between advanced and lagging countries” (p. 66). The good

guys include List, Myrdal and Wallerstein who “identify with the interests of

the lagging countries” (p. 66).

Chapter 4 presents a taxonomy of sovereignty, outlining the characteristics of

his categories of sovereign countries, dependencies, quasi-colonies and

colonies. A curious twist is that the author prefers to leave countries such as

Australia and Canada (but not South Africa, which is characterized as a

‘sovereign country’) out of the taxonomy and out of the story, even though they

used to be colonies. His argument is that some colonies, and also the lagging

countries of Europe and South America, escaped this downside of colonization

because of what Alam considers as their racial and cultural affinities with

Western Europe. Hence, due to the racism that was rife in Western countries,

only countries without racial/cultural affinities were colonized and exploited.

Chapter 5 shoehorns countries and regions with lagging economies into this

classification: peripheral European countries and South America are sovereign;

dependencies are in Central America; Africa and Asia are (quasi) colonies. The

chapter provides dates to gauge the length of time since countries were

subjugated in some form by Western countries. It then hones in on the

suggestion that becoming a dependency or colony reduced the sovereignty of

using tariff policies and therefore protection of manufacturing industry.

Chapter 6 uses these categories, the length of colonization and other variables

to crank the cross-country panel data and statistically substantiate the thesis

with which the reader is by now already very familiar. Controlling for a range

of variables, the chapter demonstrates that a lower degree of sovereignty did

enhance the economic integration of a country into the world economy (measured

with the trade/GDP ratio) but not the levels of manufacturing industry

(measured with the share of manufacturing in GDP) and human capital formation

(measured with adult literacy rates and average years of schooling) in 1960 and

1980 or economic growth in general since 1870 (based on Maddison’s data). Alam

even concludes that switching the status of colonies to sovereign countries

would have increased their annual growth rates by 1.59 percentage points (p.

158).

Chapter 7 is not a conclusion but an epilogue. The author compares two phases

of industrialization (1760-1950s and since the 1950s) to argue that the

conspiracy of the West continues. Most of the chapter is a repeat of earlier

chapters, but new are sweeping statements suggesting that since the 1980s

Western countries, led by the United States and assisted by the IMF, World Bank

and OECD, have crafted a new imperialism based on the ‘Washington consensus’ to

delay the process of manufacturing development in lagging countries and to

capture the markets and investment opportunities there.

Alam describes himself as a crusader against ‘Eurocentrist’ explanations of

underdevelopment. A b?te noire is David Landes, who is dismissed as “the chief

defender of the Eurocentric faith” (p. xiii). In a twisted way, Alam seems to

be more Eurocentric than Landes. Unlike Landes, he makes no serious effort to

understand the past development problems of any less-developed country in

particular. Moreover, his book assumes that only Western Europe engaged in

colonialist pursuits. It says nothing about colonization by non-Western

European countries, for instance Russia’s colonization of Siberia and Central

Asia, Japan’s colonization of Korea, Taiwan and Manchuria, or China’s

colonization of Mongolia and Tibet.

The tone of the book is defensive. It seems that Alam’s crusade has been

fraught with difficulties, because the academic world does not subscribe to his

views and analysis. In the preface of the book, the author’s recounts his

struggle to expose that “the social sciences” have justified and perpetuated

“Western hegemony” in understanding underdevelopment (p. xii). It mentions the

author’s efforts in getting his papers, on which this book draws, published in

peer-reviewed established academic journals. He suggests that his views and

analysis were not accepted, presumably by the ‘orthodox economists’ who

determine editorial policies of journals. After receiving refusal after

refusal, he tried instead to get book publishers interested: “Predictably, they

offered a warmer welcome” (p. xi). At US$70 for a slender booklet, that may not

be surprising.

A major problem with the book is that Alam does not make an effort to write

history. His only discussion of historical developments serves the purpose of

establishing the date when colonization started or ended. The complex processes

of colonization and the economic histories of countries are simply reduced to a

few dummy variables that represent the time since independence until 1960 or

1980. A selected number of variables in those two years is assumed to represent

the outcomes of earlier decennia of colonization. They ignore that colonization

was largely a pre-World War II phenomenon, and that ex-colonies since felt the

economic impacts of World War II and independence wars, and, worse, the

consequences of poor economic management since independence, often exactly

because they tried to implement what the author perceives as the successful

strategy towards sustained economic growth: inward-looking, import-substituting

industrialization.

Consequently, implicit in Alam’s analysis are various assumptions that are not

probed in any depth. For instance, the author implicitly assumes that, before

they were colonized, countries inhabited by non-European races were all heading

for industrialization, education, and economic growth, had it not been for the

West European colonization drive. This of course assumes that nation states

existed, which had enlightened national governments that were imbued with the

will and ability to further economic development through the kind of industrial

policies pursued by, say post-Tokugawa Japan. The book does not contain any

hint of counterfactual analysis to make this seem plausible. Of course, that

would have been a difficult task, as it requires detailed knowledge of the

areas that became colonized countries.

Still, the issue could have been addressed by contrasting the development

record of countries that never fell under colonial rule — such as Ethiopia,

Afghanistan, Nepal or China — with that of countries that did. In fact, Alam

could for that purpose have drawn on existing literature. For instance, Lloyd

Reynolds’ (1983, 1985) extensive survey of the problems of underdevelopment

based on detailed scrutiny of secondary literature for individual countries

addressed this issue. Surprisingly, Reynolds’ work is entirely missing in the

references of Alam’s book. Why? Perhaps because Reynolds (1983, p. 957)

answered his question ‘Would these areas have developed faster before 1950 if

they had been completely independent countries rather than colonies?’ as

follows: ‘There is no magic in independence.’

Anyone interested in simple explanations for economic underdevelopment will

like this book. It offers some new nuances, but basically confirms the view

that the West is to blame for the problems of underdevelopment in the world.

Anyone interested in a more profound understanding of such problems will find

this a frustrating book. It ignores the wide range of factors that play a role

in a holistic explanation of underdevelopment in the past and present: low

rates of capital formation, high population growth, low agricultural

productivity, low formation of domestic markets due to poor infrastructure

development, poor or rigid financial systems, internal political turmoil etc.

Except as variables in the regression, the book largely ignores the

idiosyncrasies of individual less-developed countries.

References:

Landes, David (1998) The Wealth and Poverty of Nations: Why Some Are So Rich

and Some So Poor. New York: W.W. Norton.

Reynolds, L.G. (1983) “The Spread of Economic Growth to the Third World:

1850-1980,” Journal of Economic Literature, 21 (3), pp. 941-980.

Reynolds, L.G. (1985) Economic Growth in the Third World, 1850-1980. New

Haven: Yale University Press.

Pierre van der Eng is Senior Lecturer at the Australian National University

and is currently visiting professor at Seikei University in Tokyo. Research

interests include various aspects of the economic history of Southeast Asia, in

particular Indonesia. Recent publications include “Food for Growth: Trends in

Indonesia’s Food Supply, 1880-1995,” Journal of Interdisciplinary

History (2000); “Indonesia’s Growth Performance in the Twentieth-Century”

in Angus Maddison et al. (editors) The Asian Economies in the Twentieth

Century (London: Edward Elgar, 2002); and “Bridging a Gap: A Reconstruction

of Population Patterns in Indonesia, 1930-1961,” Asian Studies Review

(2002).

Subject(s):Economic Development, Growth, and Aggregate Productivity
Geographic Area(s):General, International, or Comparative
Time Period(s):20th Century: WWII and post-WWII

Capitalism, Socialism and Democracy

Author(s):Schumpeter, Joseph A.
Reviewer(s):McCraw, Thomas K.

Joseph A. Schumpeter, Capitalism, Socialism and Democracy. New York: Harper & Row, 1942, 381 pp.; Third edition, 1950, 431 pp.

Review Essay by Thomas K. McCraw, Harvard Business School.

The Creative Destroyer: Schumpeter’s Capitalism, Socialism, and Democracy

Does Joseph Schumpeter’s Capitalism, Socialism and Democracy rank with the most important works of economic history of the twentieth century? Of course it does. Has there been a more penetrating analyst of capitalism than Joseph Schumpeter? No, I do not think there has.

Schumpeter led a melodramatic life (1883-1950), moving from Austria to England to Egypt to Germany before coming to Harvard for good in 1932. He was a phenomenally productive scholar, despite occasional forays into business and government in addition to a plethora of romantic liaisons that included three marriages. His first published article appeared in 1905, his last in 1950. His output included fifteen books (several of immense length), six pamphlets, about one hundred book reviews, and 148 articles, comments, and occasional pieces.

Long after his death, his influence continues to grow. Massimo M. Augello’s Joseph Alois Schumpeter: A Reference Guide appeared in 1990 and ran to over 350 pages. Since then, several dozen articles on Schumpeter have appeared, in addition to biographies by Eduard M?rz, Robert Loring Allen, Richard Swedberg, and Wolfgang Stolper. All of this work has enriched our knowledge of this remarkable polymath.

Just how great was Schumpeter? Tibor Scitovsky places him at the very top: “America’s most brilliant economist.” The intellectual historian Martin Kessler agrees, arguing that Schumpeter was, apart from Keynes, “the only truly great economist the twentieth century has produced.” Oskar Morgenstern sensibly comments that at this level rankings become pointless, that “all will agree that [Schumpeter] belongs to that small top group where a further ranking becomes almost impossible.”1

Many scholars of business history, most notably Alfred D. Chandler, Jr., have looked to Schumpeter as the economist who best understood the rise of big business and the central roles of innovation and entrepreneurship.2 In economic history, the work of Nathan Rosenberg and William Lazonick, among others, is imbued with Schumpeterian insights.3 In the study of “business strategy,” a term probably coined by Schumpeter in Capitalism, Socialism and Democracy, Michael Porter’s seminal work places a distinctly Schumpeterian emphasis on relentless innovation as the essence of competitive strategy.4 Within economics, Schumpeter’s influence in America is perhaps best exemplified by the work of F. M. Scherer and Richard R. Nelson. Scherer, a prolific scholar and author of a standard textbook in industrial organization, acknowledges his intellectual debts in a book entitled Innovation and Growth: Schumpeterian Perspectives . Nelson’s Schumpeterian proclivities are on display in An Evolutionary Theory of Economic Change , co-authored with Sidney G. Winter.5 A few other economists have tried to implement parts of the Schumpeterian system, particularly those having to do with innovation.6

Most mainstream economists have been frustrated by the difficulty of operationalizing Schumpeter’s models. His aversion to equilibrium as a realistic picture of capitalist economies restricts the mathematicization of his system. Then, too, because he insisted on fusing economics with history, sociology, and psychology, the number of variables becomes almost impossible for the analyst to control.7

As a scholar Schumpeter never advanced a program of economic reform. He believed that doing so compromised “scientific” work. In particular he criticized Keynes and other English economists for their “Ricardian Vice” of leaping into policy debates with abstract models as general prescriptions for change.8 Schumpeter himself took a very different approach in Capitalism, Socialism, and Democracy.

Capitalism, Socialism, and Democracy and Its Predecessor Book

Schumpeter’s core argument in Capitalism, Socialism, and Democracy is reducible to three major tenets:

1. The essence of capitalism is innovation (“creative destruction”) in particular sectors. Certain standard tools of economics, such as static equilibrium and macroeconomic analysis, can therefore disguise reality and mislead scholars and students.

2. The virtues of capitalism–in particular its steady but gradual pattern of growth–are long-run and hard to see; its defects, such as inequality and apparent monopoly, are short-run and conspicuously visible.

3. It is dangerous for economists to prescribe “general” recipes, because political and social circumstances are always changing.

Capitalism, Socialism, and Democracy was Schumpeter’s most popular success by far. Translated into at least sixteen languages, it still sells widely in paperback editions. Although the author often compared it unfavorably with his more scholarly books, it retains its seminal quality three generations after it appeared.

Despite the book’s title, it contains little of lasting interest about either socialism or democracy. But it bursts with ideas about capitalism, and as a “performance”–a term Schumpeter liked to apply to others’ works–it may be the best analysis of capitalism ever written.

Only three years before the appearance of this great work, Schumpeter had brought out another book he thought would be his magnum opus: the 1100-page Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process. The virtues of the second book, Capitalism, Socialism, and Democracy, can be fully understood only against the shortcomings of this prior work.

The first problem with Business Cycles was its extraordinary and wholly unnecessary length. A second characteristic was the author’s misguided attempt to turn business cycle patterns into predictive scientific wave theories borrowed from physics. As Schumpeter wrote, “Barring very few cases in which difficulties arise, it is possible to count off, historically as well as statistically, six Juglars [8-10-year business cycles] to a Kondratieff [50-60 years] and three Kitchins [40 months] to a Juglar–not as an average but in every individual case.” Why this was so, he admitted, “is indeed difficult to see.”9 As his former student Paul Samuelson wrote thirty-five years later, the whole exercise “began to smack of Pythagorean moonshine.”10

The third noteworthy aspect of Business Cycles was its remarkable richness of historical detail and understanding. Though the explanation of cycles remained problematical, the historical vision was squarely on point: that capitalism–not all economic activity, just capitalism–is fundamentally an unstable, disequilibrating process.11

Simon Kuznets, a macroeconomist and future Nobel laureate, wrote for the American Economic Review a fifteen-page analysis of Business Cycles. It was the most thorough and important of the reviews, kindhearted in tone but still devastating. Kuznets conceded that Schumpeter had written a “monumental treatise” that raised all the right questions and did relate short-term business cycles to long-run economic movements. Still, Kuznets wrote, business cycles are essentially quantitative phenomena. Instead of robust statistical argument, Schumpeter had presented the reader with “an intellectual diary,” an account of his own “journey through the realm of business cycles and capitalist evolution, a journal of his encounters there with numerous hypotheses, diverse historical facts, and statistical experiments.” These efforts could not substitute for robust quantitative analysis.12 Two other reviewers noticed Schumpeter’s implicit distaste for macroeconomics, referring to his “vigorous stand against ‘the curse of aggregative thinking.'”13

Given the harsh reception of Business Cycles, published only three years earlier, the content and also the detached and ironic tone of Capitalism, Socialism and Democracy appear in a different light. It is as though Schumpeter, now deeply pessimistic about the state of the world, decided to unburden himself not only on economics but on a broad array of other subjects as well. Hence the candor and breadth of the 1942 book, which produced thousands of future citations by scholars in sociology, history, economics, and other disciplines.14

Some of the major themes represent reworkings of ideas Schumpeter had first presented in articles published long before, while in his twenties (he was fifty-nine in 1942). A capitalist economy, he now wrote in Capitalism, Socialism and Democracy, “is not and cannot be stationary. Nor is it merely expanding in a steady manner. . . . Every situation is being upset before it has had time to work itself out. Economic progress, in capitalist society, means turmoil.”15

In a 54-page analysis of Karl Marx at the beginning of Capitalism, Socialism and Democracy, Schumpeter considers Marx as Prophet, Sociologist, Economist, and Teacher. It’s hard to avoid the thought that the author construed himself in the same roles. Certainly his critique of Marx is full of insight: “Now Marx saw this process of industrial change more clearly and he realized its pivotal importance more fully than any other economist of his time.” He accomplished a fusion of history and theory whose result represented something different from either one alone. Marx “was the first economist of top rank to see and to teach systematically how economic theory may be turned into historical analysis and how the historical narrative may be turned into histoire raison?e.” Nevertheless, Schumpeter’s final verdict is negative, because of the “failure of [Marx’s] prediction of increasing misery,” which in turn derived from “wrong vision and faulty analysis.” Although Marx the economist and sociologist was mostly correct, Marx the prophet and teacher proved to be disastrously wrong.16

As prophet, the same might be said of Schumpeter himself. On page 61 of Capitalism, Socialism and Democracy Schumpeter asks, “Can capitalism survive?”, then replies, “No. I do not think it can.”17 This provocative passage may have been sincere, or simply Schumpeter’s way of getting the reader’s full attention. His purpose was to lay bare the core nature of capitalism–to show how it works, to demonstrate why, on balance, it is a good thing; and then to highlight its fragility.18

In response to the standard charge that capitalism distributes its fruits inequitably, Schumpeter points out that “Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort. . . . the capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.”19

A by-product of capitalism is the dominance of all life by an economic calculus, which Schumpeter calls “rationality.” He shows how powerfully the economic way of thinking bestows rewards and penalties: “Prizes and penalties are measured in pecuniary terms. Going up and going down means making and losing money. . . . The promises of wealth and the threats of destitution that [this arrangement] holds out, it redeems with ruthless promptitude.” Constant, relentless change is the hallmark of capitalism. “It may seem strange that anyone can fail to see so obvious a fact which moreover was long ago emphasized by Karl Marx.”20

Underscoring the deficiencies of any conceptual system that proceeds from static assumptions, Schumpeter compares the universe of Adam Smith and other classical economists with the reality of modern industry. The classicists “recognized cases of ‘monopoly,’ and Smith himself carefully noticed the prevalence of devices to restrict competition.” Yet neither Smith nor most other classical and neoclassical economists “saw that perfect competition is the exception and that even if it were the rule there would be much less reason for congratulation than one might think. If we look more closely at the conditions . . . that must be fulfilled in order to produce perfect competition, we realize immediately that outside of agricultural mass production there cannot be many instances of it.”21

Schumpeter contrasts this situation with modern business, parts of which involve constantly evolving oligopolies. These new situations do not easily lend themselves to mathematical modeling. In oligopolies, “there is in fact no determinate equilibrium at all and the possibility presents itself that there may be an endless sequence of moves and countermoves, an indefinite state of warfare between firms.”22

The contemporary structure of business is best understood as having evolved from long “organizational development.” It reflects a “process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”23

In sum, the process is one of “creative destruction”–the sweeping out of old products, old enterprises, and old organizational forms by new ones. It is what capitalism consists in and what every capitalist concern has got to live in.”24 For the scholar, this necessitates a lengthy time frame for analysis: “Every piece of business strategy acquires its true significance only against the background of that process and within the situation created by it. It must be seen in its role in the perennial gale of creative destruction; it cannot be understood irrespective of it or, in fact, on the hypothesis that there is a perennial lull. . . . As long as this is not recognized, the investigator does a meaningless job.25

One result of this approach should be a sharper focus on product quality and on marketing, and a reduced emphasis on price. “[I]n capitalist reality as distinguished from its textbook picture, it is not [price] competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)–competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.” A theoretical analysis that “neglects this essential element of the case . . . even if correct in logic as well as in fact, is like Hamlet without the Danish prince.”26

Schumpeter then turns to the question of monopoly. He mounts a devastating attack on what he regards as popular American attitudes toward this subject, which, in his judgment, spill over onto big business in general. Much of what Schumpeter says here was conditioned by what happened in the 1930s, and specifically by New Dealers’ assaults on big business. He argues that the very nature of giant, capital-intensive enterprise requires strategic behavior not contemplated by orthodox economic theory except to the extent that the theory holds such behavior monopolistic. As a matter of historical record, Schumpeter insists, long-run price rigidities are practically unknown. The same is true of long-run cases of monopoly, which are rarer than instances of perfect competition.27

It seemed plain to Schumpeter that big business, instead of exploiting consumers, had radically elevated their living standards. Organizational innovation, not monopolistic profits, accounted for the prosperity of most great companies. They should be viewed with pride and awe, not with detestation and fear. “These units not only arise in the process of creative destruction and function in a way entirely different from the static scheme, but in many cases of decisive importance they provide the necessary form for the achievement. They largely create what they exploit.” Monopoly rents might flow for awhile, but they are inevitably temporary, “the prizes offered by capitalist society to the successful innovator.” Under capitalism, the idea of a permanent monopoly is ludicrous, especially in manufacturing.28

Schumpeter next mounts a savage assault on the idea of perfect competition. He implies that it has evolved from an analytical tool of theoretical economics into an ideal toward which theory should guide public policy. This, he suggests, is catastrophic:

If we try to visualize how perfect competition works or would work in the process of creative destruction, we arrive at a still more discouraging result. . . . In the last resort, [cases approaching perfect competition, such as] American agriculture, English coal mining, [and] the English textile industry are costing consumers much more and are affecting total output much more injuriously than they would if controlled, each of them, by a dozen good brains.29

Pushing his analysis to its limits, Schumpeter identifies capitalist entrepreneurship with technological progress itself. As a matter of historical record, they were “essentially one and the same thing,” the first being “the propelling force” of the second.”30

At this point in the book, Schumpeter begins to lay the foundations for his famous argument that capitalism contains the seeds of its own destruction–not for economic reasons but for sociological ones. His reasoning proceeds as follows:31

1. In pre-capitalist times, no sheer economic achievement, by itself, could advance anyone into the ruling class.

2. When capitalism began to develop, persons of “supernormal ability and ambition” became upwardly mobile provided they would “turn to business.”

3. It was hard to succeed in business, yet success remained inglorious: “no flourishing of swords about it, not much physical prowess, no chance to gallop the armored horse into the enemy. . . . The stock exchange is a poor substitute for the Holy Grail.”

4. There can be no assurance that people are “happier” or “better off” under industrialism than in the medieval manor or village. Efficiency is only one of many human desiderata, and perhaps not the most important one.

5. So the future of capitalism can’t be assured purely because of its economic superiority. “I am not going to argue, on the strength of that performance, that the capitalist intermezzo is likely to be prolonged.”

6. Capitalism all but destroyed most of the secular underpinnings of civilized society–the manor, village, and craft guild. Yet it replaced these institutions with nothing: no idealism, no sense of organic life, no essential ability for social organization of a non-economic nature.

7. In particular, the talents necessary for economic success don’t translate well into other realms of life. “A genius in the business office may be, and often is, utterly unable outside of it to say boo to a goose–both in the drawing room and on the platform.”

8. So, without protection from some other source, “the bourgeoisie is politically helpless and unable not only to lead its nation but even to take care of its particular class interest.”

9. Because capitalist evolution, and particularly the rise of big business, attacks masses of small producers and merchants, it alienates its natural allies, indirectly giving reinforcements to the enemy.

10. The substitution of a share of stock for tangible goods “takes the life out of the idea of property.” If this process goes on long enough and thoroughly enough, “there will be nobody left who really cares to stand for [property].”

11. Capitalism works gradual changes within the psyches of individuals. By reducing everything to an economic calculus, it “rationalizes” thinking. It “creates a critical frame of mind which, after having destroyed the moral authority of so many other institutions, in the end turns against its own.”

12. The philosophical case for capitalism is beyond the intellectual capacity of most persons, even most economists. “Why, practically every nonsense that has ever been said about capitalism has been championed by some professed economist.”

13. Most important, the case for capitalism “must rest on long-run considerations.” In the short run, it is impossible for most people, even intellectuals, to ignore exasperating “profits and inefficiencies” and focus instead on long-range trends.

14. Uniquely among types of societies, capitalism is so successful economically that it “creates, educates and subsidizes a vested interest in social unrest.” It underwrites a class of hostile intellectuals who have no “direct responsibility for practical affairs” and little experience in managing anything.

15. The rise of mass media makes this situation more dangerous by multiplying the access of demagogues to short-run human instincts and desires. In the process, “public policy grows more and more hostile to capitalist interests.”

16. Bureaucracies in Europe antedate the capitalist epoch and owe no allegiance to bourgeois values. Bureaucracies in America, however, with no real civil service tradition, hold onto their antipathy toward capitalism because they don’t grasp the vast stakes at issue. Given the “legislative, administrative and judicial practice born of that hostility, entrepreneurs and capitalists–in fact the whole stratum that accepts the bourgeois scheme of life–will eventually cease to function.”

17. Most alarming of all, the bourgeois family may disintegrate. As soon as men and women “introduce into their private life a sort of inarticulate system of cost accounting,” they will become aware that “children cease to be economic assets.” When this happens, the last pillar of bourgeois society will fall.

Much of Schumpeter’s argument here might be interpreted as a cry from the heart of a brilliant but unlucky European elitist, who had witnessed one catastrophe after another during the bloody first half of the twentieth century. Even in contemporary America, a unique opportunity for the development of an advanced capitalist society stood on the edge of disaster. It was happening in the United States because of the Great Depression, the ascendance of fascism and communism in Europe, and the onset of World War II. It had not happened earlier because “The scheme of values that arose from the national task of developing the economic possibilities of the country drew nearly all the brains into business and impressed the businessman’s attitudes upon the soul of the nation.”32

Schumpeter professed to see not only the decline of capitalism but also the ultimate triumph of socialism. “Can socialism work?” he asks. “Of course it can.” In large part, it can work because it inspires people to noble ends, to something larger than themselves. Socialism implies “a new cultural world” whose psychic rewards may be worth the price of optimal economic efficiency. For true believers, “Socialist bread may well taste sweeter to them than capitalist bread simply because it is socialist bread, and it would do so even if they found mice in it.”33

Despite memorable aphorisms such as this one, Schumpeter’s analysis of socialism and democracy is a good deal less compelling than his dissection of capitalism. He says of democracy that it is best understood not as a system but merely a “method”–an “institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote.” Of course there is much more to democracy than this, but Schumpeter’s real interests lie elsewhere.34

At the very end of Capitalism, Socialism and Democracy, Schumpeter delivers a philippic about the intrusion of modern government, and specifically the New Deal state, into economic life. He mentions counter-cyclical policies, redistributive taxation, antitrust, price controls, monetary policy, the regulation of labor, securities legislation, and the “indefinite extension of the sphere of wants” to be supplied by public enterprise. Yet, ever the “scientist” reluctant to succumb to the Ricardian Vice, Schumpeter closes with this remarkable statement: “It would spell complete misunderstanding of my argument if you thought that I “disapprove” or wish to criticize any of these policies. Nor am I one of those who label all or some of them “socialist.”35

The Book’s Reception

Capitalism, Socialism and Democracy received a modicum of attention in 1942, when it was first published. A second edition, which appeared in 1946, attracted wider notice, and the third, in 1950, became an international best-seller.

Reviewing the first edition, the Cambridge economist Joan Robinson found that Schumpeter “has little love for socialism, and none at all for socialists. His natural sympathy is all with the heroic age of expanding capitalism.” Herself a leading theorist of imperfect competition, Robinson found Schumpeter’s analysis of that subject the “most brilliant” part of the book: “his argument blows like a gale through the dreary pedantry of static analysis.” Although Schumpeter had little to say about contrary evidence, especially in his argument about the fadeout of capitalism and its replacement by socialism, “The reader is swept along by the freshness, the dash, the impetuosity of Professor Schumpeter’s stream of argument.” Whether or not the reader was totally convinced, “this book is worth the whole parrot-house of contemporary orthodoxies, right, left, or centre.”36

Reviewing the 1946 edition of Capitalism, Socialism and Democracy, Arthur M. Schlesinger, Jr. wrote that the book “burst into the generally sterile atmosphere of political discussion like a collection of firecrackers and skyrockets.” Schumpeter’s analysis made it pointless to keep repeating mindless slogans about the evils of monopoly. Even if he were wrong, “there is no percentage in dodging the uncomfortable points he raises. The intellectual rigor of his analysis sets a standard that liberal writers should try to meet.” The book “is the performance of an intellectual virtuoso, brilliant, complex, perfectly controlled.”37 In 1981, a retrospective analysis of the book appeared, entitled Schumpeter’s Vision: Capitalism, Socialism, and Democracy After 40 Years.38 Here several of Schumpeter’s former students and associates joined with some European scholars in evaluating the book’s legacy. Paul Samuelson led off, conceding that the subject under discussion was “a great book.” He added that from a game theoretic viewpoint Schumpeter might have taken account of the propensity of democratic groups to change the nature of capitalism and to bend it to their own self-interest. Schumpeter’s praise of Marx for “being learned, bold to speculate, and broad in his dynamic vision” describes Schumpeter himself, Marx thereby being “a veritable chip off the new block.” Yet “Schumpeter was of all my teachers the one whose economics was essentially farthest from Marx’s.”39

The sociologist Tom Bottomore, a man of the Left, lamented Schumpeter’s disinclination to cast his analysis in terms of economic and social class. Thus, he had overlooked some important changes that now (in the 1980s) were clearer: “A very large part of the middle class, in spite of variations. . . has maintained a political orientation which is much more favourable to parties of the right and the centre than to those of the left. . . . [Schumpeter] thought that the ‘march into socialism’ was well-nigh irresistible, and deplored the fact. I, on the contrary, think that this ‘march’ has come to an untimely halt, and regret the eclipse of the highest ideal that has emerged in modern Western culture.”40

In a third essay, Schumpeter’s fellow Austrian and longtime Harvard colleague Gottfried Haberler wrote that although Schumpeter never said so in Capitalism, Socialism and Democracy, it was clear that his “real feeling” was “that capitalism or the ‘bourgeois’ society is very much worth fighting for.” Schumpeter’s forecast of capitalism’s downfall “has shocked and puzzled many people. If all qualifications, reservations, and elucidations are given their proper attention, however, the forecast of capitalism’s early doom becomes less apodictic and the demise of capitalism loses much of its inevitability.” Then, too, Schumpeter’s emphasis on rising resentment of taxation anticipated the American tax revolt that began in the 1970s, a movement of extraordinary importance.41

The economist Robert L. Heilbroner, a first-rate stylist himself, judged Capitalism, Socialism and Democracy partly on artistic terms: “There is [in the book] a great deal of attitudinizing. . . an open delight in epater le bourgeois and tweaking the noses of radicals. There is also pomposity and pedantry, mixed with an arrogance that teeters on the edge of a dangerous elitism.” Yet the book remains full of “perceptive insights,” such as Schumpeter’s remark that “The evolution of the capitalist lifestyle is best described ‘in terms of the genesis of the modern lounge suit,’ a remark worthy of Thorstein Veblen.”42

Arthur Smithies, Schumpeter’s former student and colleague, saw Capitalism, Socialism and Democracy in part as a reaction against Keynesianism. Schumpeter had openly derided the “stagnation thesis” introduced in Keynes’s General Theory. This thesis holds that as a country grows richer investment opportunities shrink but the propensity to save increases; therefore savings and investment balance only at high unemployment. “If valid,” wrote Smithies, “the long-run Keynesian argument provided an impregnable case for socialism.” Yet Schumpeter saw that the underpinnings of the stagnation thesis were the atypical conditions of the Great Depression. He “maintained his sanity” and insisted that such problems were not permanent but cyclical. As for Schumpeter’s concern with inflation, in the 1940s Anglo-American economists thought it “obsessive,” but in fact Schumpeter proved remarkably prescient.43

Herbert K. Zassenhaus, another economist from the generation just behind Schumpeter, detected “a certain mysticism” in Capitalism, Socialism, and Democracy. “In the shape of the ‘entrepreneur,'” Schumpeter introduces “a social miracle in the precise sense of the word: an event beyond the laws of nature and society.”44

In perhaps the most telling of all the retrospective comments, the Dutch scholar Henrik Wilm Lambers recalled Schumpeter’s influence on him as a youth and the continued appeal of his book. In Capitalism, Socialism and Democracy, Lambers wrote, “Schumpeter accomplished the feat of moving five layers of thought–the firm, the markets, the institutions, the cultural values, the leaders of society–as one interwoven dynamic process. With incomparable skill he made history go through time as one stream.” Lambers’ own students were invariably taken with the book: “After many an oral graduate examination, I have often heard remarks like: ‘to be honest, the one stimulating book was Schumpeter’.” Radical and conservative students alike “say, each in their own way, ‘he keeps me puzzled: is it my fault or did he intend to?'”45

Capitalism, Socialism, and Democracy continues to puzzle and provoke readers–to make them think, to question their own perceptions measured against their own ideologies and to wonder about the author’s intentions. Only the very greatest books do this, and age so well.

Endnotes:

1. Tibor Scitovsky, “Can Capitalism Survive? — An Old Question in a New Setting,” Ely Lecture, American Economic Review, 70 (May 1980), p. 1; Martin Kessler, “The Synthetic Vision of Joseph Schumpeter,” Review of Politics, 23 (July 1961), p. 334; O. Morgenstern, “Obituary,” Economic Journal, 61 (March 1951), p. 203.

2. Chandler, Strategy and Structure: Chapters in the History of the Industrial Enterprise, Cambridge, MA: MIT Press, 1962, p. 284; and Chandler, Scale and Scope: The Dynamics of Industrial Capitalism, Cambridge: Harvard University Press) pp. 597, 830-831 n1.

3. See, for example, Lazonick, Competitive Advantage on the Shop Floor, Cambridge: Harvard University Press, 1990, pp. 3, 10, 323-324; and Rosenberg, “Joseph Schumpeter: Radical Economist,” in Exploring the Black Box: Technology, Economics, and History, New York: Cambridge University Press, 1994. Schumpeter often spoke on the relationship between history and theory: “Personally, I believe that there is an incessant give and take between historical and theoretical analysis and that, though for the investigation of individual questions it may be necessary to sail for a time on one tack only, yet on principle the two should never lose sight of each other”; see Schumpeter’s 1949 essay, “Economic Theory and Entrepreneurial History,” reprinted in Richard V. Clemence, editor, [Schumpeter’s] Essays: On Entrepreneurs, Innovations, Business Cycles, and the Evolution of Capitalism, New Brunswick, NJ: Transaction Publishers, 1989. See also Schumpeter, “The Creative Response in Economic History,” Journal of Economic History, 7 (November 1947).

4. Porter, The Competitive Advantage of Nations, New York: Free Press, 1990, p. 778 n.46.

5. Frederic M. Scherer, Innovation and Growth: Schumpeterian Perspectives, Cambridge, MA: MIT Press, 1984. Richard R. Nelson and Sidney G. Winter, An Evolutionary Theory of Economic Change, Cambridge, MA: Harvard University Press, 1982. Part V of this book (pp. 273-351) is entitled “Schumpeterian Competition,” and in it the authors try, mathematically, to apply Schumpeter’s insights to the process of innovation.

6. See, in general, Richard V. Clemence and Francis S. Doody, The Schumpeterian System, Cambridge, MA: Addison-Wesley, 1950. For more specialized efforts, and critiques of them, see Carolyn Shaw Solo, “Innovation in the Capitalist Process: A Critique of the Schumpeterian Theory,” Quarterly Journal of Economics, 65 (August 1951), pp. 417-428; Franklin M. Fisher and Peter Temin, “Returns to Scale in Research and Development: What Does the Schumpeterian Hypothesis Imply?” Journal of Political Economy, 81 (January/February 1973), pp. 56-70 [see also Comments by Carlos Alfredo Rodriguez and Reply by the authors in Journal of Political Economy, 87 (April 1979), pp. 383-389]; Morton I. Kamien and Nancy L. Schwartz, “Market Structure and Innovation: A Survey,” Journal of Economic Literature, 13 (March 1975), pp. 1-37; Carl A. Futia, “Schumpeterian Competition,” Quarterly Journal of Economics, 94 (June 1980), pp. 675-695; Meir Kohn and John T. Scott, “Scale Economies in Research and Development: The Schumpeterian Hypothesis,” Journal of Industrial Economics, 30 (March 1982), pp. 239-249; and Horst Hanusch, editor, Evolutionary Economics: Applications of Schumpeter’s Ideas, Cambridge: Cambridge University Press, 1988.

7. During the 1990s the Schumpeter literature became especially voluminous, with articles in such publications as the Journal of Evolutionary Economics and the Journal of Institutional Economics. These pieces often drew as much on Schumpeter’s sociology as on his economics. Several sought to apply biology to Schumpeter’s evolutionary analysis.

8. Schumpeter actually used the word “sins”: “I did not exactly wish to put Ricardo and Keynes on the same level, but I do think that there is striking similarity between their sins.” (Letter to Arthur W. Marget, Feb. 24, 1937, Schumpeter Papers, Harvard University Archives.)

9. Joseph A. Schumpeter, Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process, New York: McGraw-Hill, 1939, Volume I, pp. 169, 173, 174.

10. Samuelson, “Joseph A. Schumpeter,” Dictionary of American Biography, Supplement Four, 1946-1950, New York: Scribner, 1974, p. 723.

11. In this book the orientation appears most clearly in some vivid passages on pages 220-245 of Volume I.

12. Simon Kuznets, American Economic Review, 30 (June 1940), pp. 257, 266-271.

13. E. Rothbarth, Economic Journal, 52 (June-Sept. 1942), p. 229; J. Marschak, Journal of Political Economy, 48 (Dec. 1940), p. 892.

14. An insightful analysis of Schumpeter’s state of mind when he wrote Capitalism, Socialism, and Democracy may be found in Chapter 7 of Richard Swedberg, Schumpeter: A Biography, Princeton, NJ: Princeton University Press, 1991.

15. Capitalism, Socialism, and Democracy, New York: Harper Torchbook Edition, 1976, pp. 31-32.

16. Capitalism, Socialism, and Democracy, p. 32, 34, 44.

17. Capitalism, Socialism, and Democracy, p. 61.

18. In the revised edition of Capitalism, Socialism and Democracy appears Schumpeter’s final paper, “The March into Socialism” (December 1949). Here he speaks candidly about capitalism’s social implications: “Capitalism does not merely mean that the housewife may influence production by her choice between peas and beans; or that the youngster may choose whether he wants to work in a factory or on a farm; or that plant managers have some voice in deciding what and how to produce: it means a scheme of values, an attitude toward life, a civilization–the civilization of inequality and of the family fortune” (p. 419).

19. Capitalism, Socialism, and Democracy, pp. 67-68.

20. Capitalism, Socialism, and Democracy, pp. 73-74, 77 n1, 82. In History of Economic Analysis, published posthumously (New York: Oxford University Press, 1954), Schumpeter wrote that in capitalism, “Disequilibrium prevails throughout, but Marx saw that this disequilibrium is the very life of capitalism” (p. 1051).

21. Capitalism, Socialism, and Democracy, pp. 78-79.

22. Capitalism, Socialism, and Democracy, p. 79.

23. Capitalism, Socialism, and Democracy, p. 83.

24. Capitalism, Socialism, and Democracy, p. 83.

25. Capitalism, Socialism, and Democracy, pp. 83-84.

26. Capitalism, Socialism, and Democracy, pp. 84-86.

27. Capitalism, Socialism, and Democracy, pp. 93, 99.

28. Capitalism, Socialism, and Democracy, pp. 101-102.

29. Capitalism, Socialism, and Democracy, pp. 104-106.

30. Capitalism, Socialism, and Democracy, p. 110. Schumpeter adds that making such a distinction is “quite wrong–and also quite un-Marxian.”

31. My summary here is abstracted from Capitalism, Socialism and Democracy, pp. 124-157.

32. Capitalism, Socialism, and Democracy, p. 331. This point echoes one of Schumpeter’s pet themes: that all societies suffer from a paucity of first-rate talent. Legal issues, labor problems, price control issues, and antitrust prosecutions add up to a “drain on entrepreneurial and managerial energy.” So much effort is expended on such issues that an executive often “has no steam left for dealing with his technological and commercial problems.” One consequence is that except in very large companies, which can afford numerous specialists, “leading [management] positions tend to be filled by ‘fixers’ and ‘trouble shooters’ rather than by ‘production men'” (p. 388.)

33. Capitalism, Socialism, and Democracy, pp. 167, 170, 190.

34. Capitalism, Socialism, and Democracy, p. 269.

35. Capitalism, Socialism, and Democracy, p. 418. This passage is from Schumpeter’s last address, delivered to the American Economic Association in December, 1949, three weeks before his death. The address was entitled “The March into Socialism.”

36. Joan Robinson, in the Economic Journal, 53 (December 1943), pp. 381-383.

37. Arthur M. Schlesinger, Jr., in The Nation, April 26, 1947, pp. 489-491.

38. Arnold Heertje, editor, Schumpeter’s Vision: Capitalism, Socialism and Democracy after 40 Years, New York: Praeger, 1981.

39. Paul A. Samuelson, “Schumpeter’s Capitalism, Socialism and Democracy,” in Schumpeter’s Vision, pp. 1, 13, and passim.

40. Tom Bottomore, “The Decline of Capitalism, Sociologically Considered,” in Schumpeter’s Vision, pp. 22-29, 44.

41. Gottfried Haberler, “Schumpeter’s Capitalism, Socialism and Democracy after Forty Years,” in Schumpeter’s Vision, pp. 70, 71, 74-75, 83, 84, 89.

42. Robert L. Heilbroner, “Was Schumpeter Right?” in Schumpeter’s Vision, pp. 95, 96, 99-100, 101-102, 106.

43. Arthur Smithies, “Schumpeter’s Predictions,” in Schumpeter’s Vision, pp. 130-132, 145-146.

44. Herbert K. Zassenhaus, “Capitalism, Socialism and Democracy: The ‘Vision’ and the ‘Theories,'” in Schumpeter’s Vision, pp. 173, 176, 181, 189.

45. Hendrik Wilm Lambers, “The Vision,” in Schumpeter’s Vision, pp. 107-129.

Thomas K. McCraw is the Isidor Straus Professor of Business History at the Harvard Business School and editor of the Business History Review. He is author of Morgan Versus Lilienthal (William P. Lyons Award, 1970), TVA and the Power Fight (1971), co-author of Management Past and Present (1996); and editor of Regulation in Perspective (1981), America Versus Japan (1986), The Essential Alfred Chandler (1988), and Creating Modern Capitalism (1997). His book Prophets of Regulation won both the Pulitzer Prize in History for 1985 and the Thomas Newcomen Award for 1986. His American Business, 1920-2000: How It Worked (2000) was recently reviewed on EH.NET.

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):General, International, or Comparative
Time Period(s):General or Comparative

Peasants, Merchants, and Markets: Inland Trade in Medieval England, 1150-1350

Author(s):Masschaele, James
Reviewer(s):Clark, Gregory

EH.NET BOOK REVIEW

Published by EH.NET (April 1998)

James Masschaele, Peasants, Merchants, and Markets: Inland Trade in Medieval England, 1150-1350. New York: St Martin’s Press, 1997. xii + 275 pp. $45.00 (cloth), ISBN: 0-312-16035-6.

Reviewed for EH.Net by Gregory Clark, Department of Economics, University of California, Davis.

Medieval Commerce: Too Much of a Good Thing

You have got to feel sorry for our colleagues in medieval economic history. This bright and energetic group – Richard Britnell, Bruce Campbell, Christopher Dyer, Derek Keene, Maryanne Kowaleski, John Langdon, Mavis Mate, Larry Poos, Ambrose Raftis, to name just a few – are model scholars. To practice their craft they master Latin and paleography, they learn the subtleties of the documents, they spend the time in the archives. And the archives themselves are glorious: a mine of economic information so much richer than even what we find for eighteenth century England. But what reward do they get for all this effort and all this erudition? The more we learn about medieval England, the more careful and reflective the scholarship gets, the more prosaic does medieval economic life seem. The story of the medieval economy in some ways seems to be that there is no story.

Back in the bad old days, when the scholarship was less careful, the medieval economy was mysterious and exciting. Marxists, neo-Malthusians, Chayanovians, and other exotics debated vigorously their pet theories of a pre-capitalist economic world in a wild speculative romp. But little by little, as the archives have been systematically explored, and the hypotheses subject to more rigorous examination, medieval economic historians have been retreating from their exotic Eden back to a mundane world alarmingly like our own.

This book, by James Masschaele, a historian at Rutgers University, is a nice piece of scholarship which constitutes a few more steps in this long retreat from paradise. His book is really a collection of essays exploring various aspects of the English medieval market before the Black Death. In successive chapters, through skilled and convincing use of tax records and other sources Masschaele shows that the medieval economy was thoroughly permeated by markets and market activities.

Thus the occupants of medieval towns engaged in a wide variety of specialized commodity production, of which the main were victualling, leather making, textiles, clothing, vending, metal working, and building. Those in towns were all engaged in the market. Some peasants were able to produce a substantial surplus of grain and animal products which must normally have been sold on the market. Many peasants were thus also in the market. Much, and perhaps even most, of the great cash crop of medieval England, wool, was produced on peasant holdings and not on the lay and clerical estates.

Those with the right to hold markets defended that right vigorously and tried to limit competition. But the English courts generally interpreted this right as excluding only other markets held on the same day within 6.7 miles. Thus in the East Midland counties of Northampton and Bedford we see even before 1250 many markets within 6.7 miles of their neighbors. Indeed it seems from the map given in the book that the average location in these counties would about 5 miles from a market by 1250. By 1690 I know from other sources that the average distance to market in these counties had shrunk to 3.3 miles. But this seems a very modest gain in the prevalence of markets over these years. If the monopoly right to hold a market exercised much restriction on the medieval economy, then markets should have generated significant incomes for their owners through market tolls. In fact toll rates were generally seldom more than 1% of the value of goods traded, and there were many who were by one custom or another exempted from toll. Thus goods bought for household consumption typically did not pay toll. Similarly small goods such as apples, or butter in earthen pots, produced by peasant households were also apparently often exempt.

Towns similarly seem to display an expected urban hierarchy, with a few major trade and manufacturing centers and a large array of smaller places with very little evidence of commercial or manufacturing activity. Using records of disputes over toll payments and toll exemptions Masschaele shows that there were significant trade relations between towns that could be quite distant from each other. Thus, for example, in 1315 the town of Sandwich seized the almonds, figs and raisins of a merchant refusing to pay toll, where the merchant was from London, 63 miles away.

Using again records of toll disputes Masschaele is also able to get some information about the marketing activities of rural producers. By the early thirteenth century English kings, as pious acts, had granted exemption from toll in all markets to most major ecclesiastical corporations. This exemption was held to apply to their manorial tenants also. The exemption was meant to apply to rural produce sold by the tenants to meet their rent payments to the houses. Tenants on the royal demesne had by custom a similar privilege. Tenants of both types, however, seem to have availed themselves of the exemption to further general trade activities. Thus even in the fourteenth century many court cases appear where rural tenants of religious orders or of the king are alleged to be buying goods with intent to resell, or selling goods they had bought.

In one of the later chapter Masschaele documents carrying costs by land and water per ton-mile in Cambridgeshire and Huntingdonshire between 1305 and 1346. These costs suggest, for example, that if wheat was transported by water is would cost about 1.4% of its final value per additional ten miles carried. These costs seem relatively modest.

The concluding chapter begins with the statement, “By the end of the thirteenth century, England had developed a sophisticated commercial economy that embraced all levels of society” (p. 227). There is no doubt that this statement is well supported by the evidence of the book. But if medieval England was just a low-tech version of Kansas, why would anyone be interested in its economy? The early economy had, I believe, some very interesting features. But focused as this tradition is on the existence and extent of the market, I fear that further excellent scholarship such as this can only provide more compelling evidence of the utter dullness of the medieval economy. For this erudition to be more interestingly employed, at least as far as economic historians are concerned, it needs to be directed at a richer set of issues than just the existence of the market.

Gregory Clark Department of Economics University of California- Davis

Among Gregory Clark’s recent publications are “The Political Foundations of Modern Economic Growth: England, 1540-1800,” Journal of Interdisciplinary History, 26 (Spring, 1996), “Commons Sense: Common Property Rights, Efficiency, and Institutional Change,” Journal of Economic History, 58 (March, 1998) and “Land Hunger: Land as a Commodity and as a Status Good in England, 1500-1914,” Explorations in Economic History, 35 (1), (Jan., 1998).

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Subject(s):Markets and Institutions
Geographic Area(s):Europe
Time Period(s):Medieval